SCHEDULE 14A
                                 (Rule 14a-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION
           Proxy Statement Pursuant to Section 14(a) of the Securities
                  Exchange Act of 1934 (Amendment No. _______)

Filed by the registrant [X]
Filed by a party other than the registrant [  ]

Check the appropriate box:
[ ] Preliminary Proxy Statement    [ ] Confidential, for use of the Commission
[X] Definitive Proxy Statement         Only (as permitted by Rule 14a 6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss. 240.14a-11(c) or ss. 240.14a-12

                             KEARNY FINANCIAL CORP.
    ------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

    ------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):
  [X] No fee required
  [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

         (1) Title of each class of securities to which transaction applies:
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         (2) Aggregate number of securities to which transaction applies:
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         (3) Per unit price or other  underlying  value of transaction  computed
pursuant  to Exchange  Act Rule 0-11.  (set forth the amount on which the filing
fee is calculated and state how it was determined):
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         (4) Proposed maximum aggregate value of transaction:
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         (5) Total fee paid:
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  [ ] Fee paid previously with preliminary materials.

  [ ] Check box if any part of the fee is offset as  provided  by  Exchange  Act
Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was paid
previously.  Identify the previous filing by registration  statement  number, or
the Form or Schedule and the date of its filing.

         (1) Amount previously paid:
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         (2) Form, Schedule or Registration Statement No.:
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         (3) Filing Party:
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         (4) Date Filed:
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                             Kearny Financial Corp.






September 30, 2005




Dear Stockholder:

         On behalf of the Board of Directors and Management of Kearny  Financial
Corp.,  we cordially  invite you to attend our Annual Meeting of Stockholders to
be held at the offices of Kearny Financial Corp., 120 Passaic Avenue, Fairfield,
New  Jersey on October  24,  2005 at 10:00 a.m.  The  attached  Notice of Annual
Meeting of Stockholders  and Proxy Statement  describe the formal business to be
transacted at the Meeting.

         The Board of Directors of the Company has  determined  that the matters
to be considered at the Meeting,  described in the accompanying Notice of Annual
Meeting  and Proxy  Statement,  are in the best  interest of the Company and its
stockholders.  For the  reasons set forth in the Proxy  Statement,  the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.

         WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED  PROXY  CARD AND  RETURN  IT IN THE  ACCOMPANYING  POSTAGE-PAID  RETURN
ENVELOPE AS QUICKLY AS POSSIBLE. This will not prevent you from voting in person
at the  Meeting,  but will assure that your vote is counted if you are unable to
attend the Meeting. Your vote is very important.

                                           Sincerely,


                                           /s/John N. Hopkins

                                           John N. Hopkins
                                           President and Chief Executive Officer




                     120 PASSAIC AVENUE, FAIRFIELD, NJ 07004
                                  973-244-4500


--------------------------------------------------------------------------------
                             KEARNY FINANCIAL CORP.
                               120 PASSAIC AVENUE
                             FIELD, NEW JERSEY 07004
--------------------------------------------------------------------------------
                                                     
--------------------------------------------------------------------------------
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                         TO BE HELD ON OCTOBER 24, 2005
--------------------------------------------------------------------------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of  Stockholders  (the "Meeting")
of Kearny  Financial Corp. (the "Company") will be held at the offices of Kearny
Financial Corp., 120 Passaic Avenue,  Fairfield,  New Jersey on October 24, 2005
at 10:00 a.m. The Meeting is for the purpose of considering  and acting upon the
following matters:

         1.       The election of four directors of Kearny Financial Corp.;

         2.       The  approval  of  the  Kearny   Financial  Corp.  2005  Stock
                  Compensation and Incentive Plan; and

         3.       The  ratification  of the  appointment of Beard Miller Company
                  LLP as the Company's  independent  auditor for the fiscal year
                  ending June 30, 2006.

         Such other  business  as may  properly  come  before the Meeting or any
adjournments thereof may also be acted upon. The Board of Directors is not aware
of any other business to come before the Meeting.

         The Board of Directors of the Company has  determined  that the matters
to be considered at the Meeting,  described in the accompanying Notice of Annual
Meeting  and Proxy  Statement,  are in the best  interest of the Company and its
stockholders.  For the  reasons set forth in the Proxy  Statement,  the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.

         Action  may be  taken  on any  one of the  foregoing  proposals  at the
Meeting  on the date  specified  above,  or on any date or  dates to  which,  by
original or later  adjournment,  the Meeting may be  adjourned.  Pursuant to the
Company's  Bylaws,  the Board of  Directors  has fixed the close of  business on
September  21, 2005 as the record  date for  determination  of the  stockholders
entitled to vote at the Meeting and any adjournments thereof.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,  YOU ARE REQUESTED TO SIGN,  DATE
AND RETURN THE ENCLOSED  PROXY IN THE ENCLOSED  POSTAGE-PAID  ENVELOPE.  YOU MAY
REVOKE  YOUR  PROXY BY  FILING  WITH THE  SECRETARY  OF THE  COMPANY  A  WRITTEN
REVOCATION OR A DULY EXECUTED  PROXY BEARING A LATER DATE. IF YOU ARE PRESENT AT
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON ON EACH MATTER  BROUGHT
BEFORE THE  MEETING.  HOWEVER,  IF YOU ARE A  STOCKHOLDER  WHOSE  SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED  ADDITIONAL  DOCUMENTATION  FROM YOUR
RECORD HOLDER TO VOTE IN PERSON AT THE MEETING.

                                              BY ORDER OF THE BOARD OF DIRECTORS


                                              /s/Sharon Jones

                                              Sharon Jones
                                              Corporate Secretary
Fairfield, New Jersey
September 30, 2005

--------------------------------------------------------------------------------
IMPORTANT:  THE PROMPT  RETURN OF PROXIES  WILL SAVE THE  COMPANY THE EXPENSE OF
FURTHER  REQUESTS  FOR  PROXIES  IN ORDER TO INSURE A QUORUM AT THE  MEETING.  A
SELF-ADDRESSED  RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.  NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
                                 PROXY STATEMENT
                                       OF
                             KEARNY FINANCIAL CORP.
                               120 PASSAIC AVENUE
                           FAIRFIELD, NEW JERSEY 07004
--------------------------------------------------------------------------------

                         ANNUAL MEETING OF STOCKHOLDERS
                                OCTOBER 24, 2005
                                                                    
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                                     GENERAL
--------------------------------------------------------------------------------

         This Proxy Statement is furnished in connection  with the  solicitation
of proxies by the Board of Directors of Kearny  Financial  Corp. (the "Company")
to be used at the Annual  Meeting of  Stockholders  of the Company which will be
held at the Company's  offices  located at 120 Passaic  Avenue,  Fairfield,  New
Jersey on October  24,  2005 at 10:00 a.m.  (the  "Meeting").  The  accompanying
Notice of Annual  Meeting of  Stockholders  and this Proxy  Statement  are being
mailed to stockholders on or about September 30, 2005.

         At the  Meeting,  stockholders  will  consider  and  vote  upon (i) the
election of four  directors  of the Company and (ii) the  approval of the Kearny
Financial  Corp.  2005  Stock   Compensation  and  Incentive  Plan  (the  "Stock
Compensation  and Incentive  Plan" or the "Plan") and (iii) the  ratification of
the appointment of Beard Miller Company LLP as the Company's independent auditor
for the fiscal year ending June 30, 2006.

         The Company is the parent company of Kearny  Federal  Savings Bank (the
"Bank").  The  Company  is  the  majority-owned  subsidiary  of  Kearny  MHC,  a
federally-chartered  mutual holding company. Since Kearny MHC owns approximately
70% of the Company's outstanding common stock, the votes cast by Kearny MHC will
be   determinative  in  the  election  of  directors  of  the  Company  and  the
ratification of auditors.  The  affirmative  vote of both: (a) a majority of the
votes eligible to be cast at the Meeting  including votes cast by Kearny MHC and
(b) a majority  of the votes  cast at the  Meeting  by  stockholders  other than
Kearny MHC (without regard to either (i) broker non-votes or (ii) proxies marked
"ABSTAIN") is required for the approval of the Stock  Compensation and Incentive
Plan.

         The Board of  Directors  knows of no  additional  matters  that will be
presented  for  consideration  at the Meeting.  Execution  of a proxy,  however,
confers on the designated  proxyholder the  discretionary  authority to vote the
shares  represented by such proxy in accordance with their best judgment on such
other  business,  if any,  that may  properly  come  before  the  Meeting or any
adjournment thereof.

--------------------------------------------------------------------------------
                       VOTING AND REVOCABILITY OF PROXIES
--------------------------------------------------------------------------------

         Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the  Meeting  and all  adjournments  thereof.  Proxies may be revoked by written
notice to the  Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular  proposal at the
Meeting.  A proxy will not be voted if a  stockholder  attends  the  Meeting and
votes in person.  Proxies  solicited by the Board of Directors  will be voted as
specified  thereon.  If no specification  is made,  signed proxies will be voted
"FOR" the nominees for directors as set forth herein,  "FOR" the approval of the
Stock Compensation and Incentive Plan and "FOR" the ratification of Beard Miller
Company LLP as the Company's independent auditor for the fiscal year ending June
30, 2006. The proxy confers discretionary authority

                                       -1-



on the persons  named thereon to vote with respect to the election of any person
as a director  where the nominee is unable to serve,  or for good cause will not
serve, and with respect to matters incident to the conduct of the Meeting.

--------------------------------------------------------------------------------
             INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
--------------------------------------------------------------------------------

         Officers,  directors and employees of the Company and its  subsidiaries
have  an  interest  in  a  matter  being  presented  for  stockholder  approval.
Stockholder approval of the Stock Compensation and Incentive Plan is required in
order  to  grant  officers,  directors  and  employees  of the  Company  and its
subsidiaries  stock options or restricted  stock under the Plan. The approval of
the Plan is being presented as Proposal II.

--------------------------------------------------------------------------------
                 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
--------------------------------------------------------------------------------

         Stockholders  of record as of the close of  business on  September  21,
2005 (the  "Record  Date"),  are  entitled  to one vote for each share of common
stock of the Company,  par value $0.10 per share (the "Common Stock") then held.
As of the Record Date, the Company had 72,737,500  shares of Common Stock issued
and outstanding.

         As provided in the Company's  Charter,  for a period of five years from
February 23, 2005, the date of completion of the Company's  initial public stock
offering,  no person,  except  Kearny MHC, is permitted to  beneficially  own in
excess of 10% of the Company's  outstanding Common Stock (the "Limit"),  and any
shares of Common Stock acquired in excess of the Limit are not entitled to vote.
A person or entity is deemed to  beneficially  own shares  owned by an affiliate
of, as well as persons acting in concert with, such person or entity.

         The  presence  in  person  or by proxy of at  least a  majority  of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the  Meeting.  With  respect to any matter,  broker  non-votes  (i.e.,
shares  for  which a  broker  indicates  on the  proxy  that it  does  not  have
discretionary  authority to vote on such matter) will be considered  present for
purposes of determining  whether a quorum is present. In the event there are not
sufficient  votes for a quorum or to approve  any  proposals  at the time of the
Meeting,   the  Meeting  may  be  adjourned  in  order  to  permit  the  further
solicitation of proxies.

         As to the election of directors (Proposal I), the proxy provided by the
Board of Directors allows a stockholder to vote for the election of the nominees
proposed by the Board of Directors,  or to withhold  authority to vote for those
nominees.  Under the Company's  bylaws,  directors are elected by a plurality of
votes cast,  without  regard to either  broker  non-votes or proxies as to which
authority to vote for the nominees being proposed is withheld.

         As to approval of the Stock  Compensation  and Incentive Plan (Proposal
II), a  stockholder  may, by checking  the  appropriate  box: (i) vote "FOR" the
item;  (ii) vote  "AGAINST"  the item;  or (iii) vote to  "ABSTAIN" on the item.
Approval of the Plan  requires  the  affirmative  vote of both (a) a majority of
shares eligible to be voted at the Meeting  including  shares held by Kearny MHC
and (b) a majority of the shares voted at the Meeting by stockholders other than
Kearny MHC without regard to broker  non-votes or proxies marked "ABSTAIN" as to
Proposal II.

                                       -2-



         Concerning all other matters that may properly come before the Meeting,
including  the  ratification  of the  independent  auditors  (Proposal  III),  a
shareholder may: (i) vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii)
"ABSTAIN" with respect to the item.  Unless otherwise  required by law, all such
matters  shall be  determined  by a majority of shares  voted  affirmatively  or
negatively  without regard to broker non-votes or proxies marked "ABSTAIN" as to
that matter.

Security Ownership of Certain Beneficial Owners

         Persons and groups owning in excess of 5% of the outstanding  shares of
Common Stock are required to file reports  regarding such ownership  pursuant to
the Securities  Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth,  as of the Record Date,  the  ownership of the Kearny  Federal
Savings Bank Employee  Stock  Ownership  Plan and of all directors and executive
officers of the Company as a group.  Management knows of no person or group that
owns more than 5% of the outstanding  shares of Common Stock at the Record Date,
other than Kearny MHC which holds 70% of the outstanding shares of the Company.



                                                                               Percent of Shares
                                                        Amount and Nature of    of Common Stock
Name and Address of Beneficial Owner                    Beneficial Ownership      Outstanding
------------------------------------                    --------------------      -----------

                                                                            
Kearny MHC                                                 50,916,250                70.0%
120 Passaic Avenue                                                               
Fairfield, New Jersey 07004                                                      
                                                                                 
Kearny Federal Savings Bank Employee Stock                  1,745,700(1)              2.4%
Ownership Plan (the "ESOP")                                                      
120 Passaic Avenue                                                               
Fairfield, New Jersey 07004                                                      
                                                                                 
All directors and executive officers of the Company           659,318(2)              0.9%
   as a group (16 persons)                                                       


---------------------                                                          
(1)  These  shares  are  held in a  suspense  account  and are  allocated  among
     participants  annually  on the  basis of  compensation  as the ESOP debt is
     repaid.  As of the  Record  Date,  no shares  have been  allocated  to ESOP
     participants  because  the end of the first plan year does not occur  until
     December 31, 2005.
(2)  Beneficial ownership as of the Record Date. Includes shares of Common Stock
     held directly as well as by spouses or minor children,  in trust, and other
     indirect beneficial ownership.

--------------------------------------------------------------------------------
             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------------------------------

         Section 16(a) of the  Securities  and Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent  of the  Common  Stock,  to file  reports of  ownership  and  changes in
ownership of the Common Stock with the Securities and Exchange Commission and to
provide copies of those reports to the Company.  The Company is not aware of any
beneficial  owner,  as defined under Section 16(a),  of more than ten percent of
the outstanding Common Stock other than Kearny MHC. To the best of the Company's
knowledge,  all Section 16(a) filing requirements applicable to its officers and
directors were complied with during the 2005 fiscal year.

                                       -3-



--------------------------------------------------------------------------------
                       PROPOSAL I - ELECTION OF DIRECTORS
--------------------------------------------------------------------------------

         The Company's  Charter  requires that the Board of Directors be divided
into three classes,  as nearly equal in number as possible,  each class to serve
for a three-year period,  with approximately  one-third of the directors elected
each year.  The Board of Directors  currently  consists of nine  members.  Three
directors  will be elected at the  Meeting  to serve for a  three-year  term and
until their  successors  have been elected and  qualified.  One director will be
elected at the Meeting to serve for a one-year  term and until his successor has
been elected and qualified.

         Theodore  J.  Aanensen,  Joseph P.  Mazza and John F.  Regan  have been
nominated by the Board of Directors for election to a three-year  term to expire
in 2008.  On March  31,  2005,  the  Board of  Directors  appointed  Leopold  W.
Montanaro  to fill the vacant  Board  seat left by the  retirement  of  Director
Edward T. Rushforth on that date. Mr.  Montanaro has been nominated by the Board
for election to a term to expire in 2006, the  expiration  date for the class to
which he was  appointed.  It is intended that proxies  solicited by the Board of
Directors will,  unless  otherwise  specified,  be voted for the election of Mr.
Aanensen,  Dr. Mazza,  Mr. Regan and Mr.  Montanaro.  If any of the nominees are
unable to serve,  the shares  represented by all valid proxies will be voted for
the election of such substitute as the Board of Directors may recommend. At this
time, the Board of Directors knows of no reason why any of the nominees might be
unavailable to serve.

         The  following  table sets forth the names,  ages,  terms of, length of
board  service  and  the  number  and  percentage  of  shares  of  Common  Stock
beneficially owned by the nominees,  the directors  continuing in office and the
executive officers of the Company.



                                                                                       Shares of
                                                                                         Common
                                     Age at          Year First          Current         Stock          Percent
                                    June 30,         Elected or          Term to      Beneficially        of
Name                                  2005          Appointed(1)         Expire         Owned(2)         Class
                                 ---------------  ------------------  -------------  ---------------  -----------
                                                                                         

Board Nominees for Term to Expire in 2006
Leopold W. Montanaro                   65               2003              2005            75,001          *
                                                                                                      
Board Nominees for Term to Expire in 2008                                                             
Theodore J. Aanensen                   60               1986              2005            32,501          *
Joseph P. Mazza                        61               1993              2005            50,001          *
John F. Regan                          60               1999              2005            67,490          *
                                                                                                      
Directors Continuing in Office                                                                        
John N. Hopkins                        58               1994              2006            60,755          *
Henry S. Parow                         82               1976              2006            75,001          *
John J. Mazur, Jr.                     51               1996              2007            71,054          *
Matthew T. McClane                     68               1994              2007            20,001          *
John F. McGovern                       44               1999              2007            50,001          *
                                                                                                      

                                                                                                             
                                       -4-



Certain Executive Officers of the Company and the Bank(3)
Albert E. Gossweiler                   57              1999                N/A           52,150          *
William C. Ledgerwood                  52              2002                N/A           20,317          *
Sharon Jones                           51              1997                N/A           10,143          *
Patrick M. Joyce                       40              2002                N/A            4,516          *
Allan Beardslee                        53              1982                N/A            4,108          *
Erika Sacher Parisi                    40              2002                N/A           12,500          *
Craig L. Montanaro                     39              2003                N/A           53,779          *


------------
*    Less than 1%
(1)  Refers to the year the individual first became a director or officer of the
     Bank. Upon formation of the Company in 2001, each then-existing director of
     the Bank became a director of the Company.
(2)  Beneficial ownership as of the Record Date. Includes shares of Common Stock
     held directly as well as by spouses or minor children,  in trust, and other
     indirect beneficial ownership.
(3)  Mr. Hopkins,  Mr.  Gossweiler,  Mr.  Ledgerwood,  Ms. Jones,  and Mr. Craig
     Montanaro  also  serve as  officers  of Kearny  Financial  Corp.  The other
     officers listed herein are officers of Kearny Federal Saving Bank only.

         The  business  experience  of each  director of the Company and certain
executive  officers of the Company  and the Bank is set forth  below.  Except as
otherwise indicated,  each has held his or her present position for at least the
past five years.

Directors

         John J.  Mazur,  Jr. is the sole  owner and  president/chief  executive
officer of Elegant  Desserts,  a  wholesale  bakery  located in  Lyndhurst,  New
Jersey,  that sells gourmet cakes nationally and on QVC. He opened this business
in 1994. From 1976 to 2003, he was also a partner and general manager of Mazur's
Bakery, a retail bakery in Lyndhurst,  New Jersey, that operated from 1936 until
it was sold in 2003.  He became  chairman of the Board of Directors of Kearny in
January 2004.

         John N. Hopkins became president and chief executive  officer of Kearny
MHC,  Kearny  Financial Corp. and Kearny Federal Savings Bank in 2002 and served
the Bank  previously as executive  vice president from 1994 to 2002 and as chief
financial  officer  from 1994 to 1999.  He has been  employed by Kearny  Federal
Savings  Bank since 1975.  He is a graduate of Fairleigh  Dickinson  University.
Active in  professional  and  charitable  organizations,  he  serves on  several
committees of the New Jersey League of Community Bankers; the board of directors
of the Thrift Institutions  Community  Investment Corp. of NJ (TICIC), the board
of trustees of Clara Maass  Medical  Center,  the board of trustees of the Saint
Barnabas  Health Care System and the Rutherford  Senior  Citizens Center (55 Kip
Center).

         Theodore J. Aanensen is an owner and president of Aanensen's,  a luxury
home remodeling and custom  cabinetry  company  established in Kearny in 1951. A
graduate of Upsala  College in 1966, he has been  president of Aanensen's  since
1982.

         Joseph  P.  Mazza  is a  graduate  of  Seton  Hall  University  and the
University  of  Pennsylvania.  He  is  a  self-employed  dentist  practicing  in
Rutherford,  New  Jersey,  since  1971.  He  also  serves  on the  Board  of the
Rutherford Senior Citizens Center.

         Matthew T. McClane  retired in 2002.  He was appointed as president and
chief executive officer of Kearny Federal Savings Bank in 1994 and president and
chief executive officer of Kearny MHC and Kearny Financial Corp. in 2001. He was
employed by Kearny Federal Savings Bank from 1967 to 2002.

                                       -5-



         John  F.  McGovern  has  worked  as a  self-employed  Certified  Public
Accountant and Certified  Financial Planner since 1984 and holds the designation
of Personal Financial Specialist from the American Institute of Certified Public
Accountants.  Since 2001, he has been a federally registered investment advisor.
Mr. McGovern is also the owner of McGovern Monuments,  Inc. a monument sales and
lettering  company  located  in North  Arlington,  New  Jersey  that has been in
business since 1924.

         Leopold W.  Montanaro is retired and was the  chairman,  president  and
chief executive officer of West Essex Bancorp, Inc. and West Essex Bank, located
in Caldwell,  New Jersey, until such bank was acquired by Kearny Financial Corp.
on July 1,  2003.  He was  employed  by West  Essex  Bank  from  1972  until the
completion  of the merger  with  Kearny  Federal  Savings  Bank.  He serves as a
director of Kearny Federal Savings Bank,  Kearny Financial Corp. and Kearny MHC.
He is the father of Craig L.  Montanaro,  Senior Vice  President and Director of
Strategic Planning for Kearny Federal Savings Bank and Kearny Financial Corp.

         Henry S. Parow is a graduate of Seton Hall University. He is a licensed
funeral  director  in the state of New Jersey  since  1950.  He is the  original
owner,  director and manager of the Parow Funeral  Home,  North  Arlington,  New
Jersey,  since 1957. He currently is on the Board of Directors of Kearny Federal
Savings Bank, Kearny MHC and Kearny Financial Corp.

         John F. Regan has been the majority  stockholder  and  president of two
automobile sales and service companies,  DeMassi Pontiac, Buick and GMC, located
in  Riverdale,  New Jersey  and Regan  Pontiac,  Buick and GMC,  located in Long
Island City, New York since 1995.

Executive Officers

         Albert E.  Gossweiler  became senior vice president and chief financial
officer of Kearny  Federal  Savings Bank in 1999 and of Kearny  Financial  Corp.
upon its formation in 2001. He was  previously  employed by South Bergen Savings
Bank and joined  Kearny when such bank was  acquired by Kearny  Federal  Savings
Bank in 1999.  He was employed by South Bergen  Savings Bank from 1981 until the
completion of the merger with Kearny Federal Savings Bank.

         William C. Ledgerwood  became the senior vice president,  treasurer and
chief  accounting  officer of Kearny Federal  Savings Bank and Kearny  Financial
Corp. in 2002 and has been employed by Kearny  Federal  Savings Bank since 1998.
He was previously the chief  financial  officer for The Jersey Bank for Savings,
which  opened as a de novo stock bank in 1989 and was  acquired  by  Interchange
Bank in 1998.

         Sharon Jones is the corporate secretary of Kearny MHC, Kearny Financial
Corp.  and Kearny  Federal  Savings  Bank.  She was  appointed  to the office of
corporate  secretary in 1997 and became a senior vice president in 2002. She has
been employed by Kearny Federal Savings Bank since 1972.

         Patrick M. Joyce  became the senior vice  president  and chief  lending
officer of Kearny Federal Savings Bank in 2002 and was previously vice president
of loan originations from 1999 to 2002. He was formerly employed by South Bergen
Savings  Bank  as an  assistant  corporate  secretary  and as a loan  originator
starting in 1989. He joined  Kearny when South Bergen  Savings Bank was acquired
by Kearny  Federal  Savings Bank in 1999 and was employed by such bank from 1985
until the completion of the merger with Kearny Federal Savings Bank.

         Allan Beardslee became senior vice president of information  technology
for Kearny Federal  Savings Bank in 2002 and is responsible  for electronic data
processing; prior to that, he was senior vice

                                       -6-



president  of  operations  beginning  in 1982.  He has been  employed  by Kearny
Federal Savings Bank since 1975.

         Erika  Sacher  Parisi has been the  senior  vice  president  and branch
administrator  of Kearny  Federal  Savings Bank since 2002 and was  previously a
vice  president  and branch  administrator  from 1999 to 2002.  She was formerly
employed  by  South  Bergen   Savings  Bank  as  a  vice  president  and  branch
administrator  and joined  Kearny when such bank was acquired by Kearny  Federal
Savings Bank in 1999.  She was  employed by South Bergen  Savings Bank from 1991
until the completion of the merger with Kearny Federal Savings Bank.

         Craig Montanaro  became Senior Vice President and Director of Strategic
Planning for Kearny Federal Savings Bank and Kearny  Financial Corp. in 2005 and
was previously a vice president and regional branch  administrator  from 2003 to
2004. He was formerly  employed by West Essex Bank as senior vice  president and
chief operating  officer and joined Kearny when such bank was acquired by Kearny
Federal Savings Bank in 2003. He was employed by West Essex Bank from 1988 until
the completion of the merger with Kearny Federal Savings Bank.

Meetings and Committees of the Board of Directors

         The Board of Directors  conducts its business  through  meetings of the
Board and through  activities  of its  committees.  During the fiscal year ended
June 30, 2005,  the Board of Directors  met twelve times.  No director  attended
fewer than 75% of the total meetings of the Board of Directors and committees on
which he served  during the year ended June 30,  2005.  The Board  maintains  an
Audit & Compliance  Committee,  a Budget Committee,  an Executive Committee,  an
Interest  Rate  Risk  Management  Committee,   an  Asset  Quality  Committee,  a
Nominating  Committee  and a  Compensation  Committee,  as well as a  Building &
Grounds Committee, a Governance Committee, a Planning & Marketing Committee,  an
Electronic  Data  Processing   Committee  and  a  Benefits   Equalization   Plan
Administrative Committee.

         Compensation   Committee.   The  Compensation   Committee  consists  of
Directors  Aanensen  (Chair),  Mazur,  Mazza and Parow.  This committee meets as
needed.  The  responsibilities  of  this  committee  include  appraisal  of  the
performance of officers,  administration  of management  incentive  compensation
plans and review of directors'  compensation.  This committee  reviews  industry
compensation  surveys and reviews the  recommendations of management on employee
compensation  matters. This committee met seven times during the year ended June
30, 2005.

         Compensation  Committee  Interlocks  and  Insider  Participation.   The
Compensation Committee consists of Directors Aanensen,  Mazur, Mazza, and Parow,
none of whom are or were previously  officers or employees of the Company or any
of its  subsidiaries.  During the year ended June 30,  2005,  the Company had no
"interlocking"  relationships  in which (i) an executive  officer of the Company
served as a member of the compensation committee of another entity, one of whose
executive officers served on the compensation  committee of the Company; (ii) an
executive officer of the Company served as a director of another entity,  one of
whose executive officers served on the compensation committee of the Company; or
(iii) an executive officer of the Company served as a member of the compensation
committee  of  another  entity,  one of whose  executive  officers  served  as a
director of the Company.

         Audit & Compliance Committee. The Audit & Compliance Committee consists
of Directors McGovern (Chair),  Mazur, Mazza and Regan. Each member of the Audit
Committee is independent in accordance with the listing  standards of the Nasdaq
Stock Market.  The Board of Directors has determined that John F. McGovern is an
audit committee financial expert within the meaning of the rules of the

                                       -7-



Securities  and  Exchange  Commission.  This  committee  meets  monthly and also
periodically with the internal auditor,  the compliance officer and the external
auditors.  This  committee met twelve times during the year ended June 30, 2005.
This committee's  responsibilities  include  oversight of the internal audit and
regulatory   compliance   activities  and  monitoring  management  and  employee
compliance with the Board's audit policies and applicable laws and  regulations.
This  committee  is  directly  responsible  for the  appointment,  compensation,
retention  and  oversight  of the work of the  external  auditors.  The Board of
Directors has adopted a written charter for the Audit  Committee,  which governs
its composition,  responsibilities and operation.  A copy of the written charter
is attached as Appendix A to this proxy statement.

         Report of the Audit Committee. For the fiscal year ended June 30, 2005,
the Audit Committee:  (i) reviewed and discussed the Company's audited financial
statements  with  management,  (ii)  discussed  with the  Company's  independent
auditor,  Beard Miller Company LLP ("Beard Miller"),  all matters required to be
discussed under Statement on Auditing  Standards No. 61, and (iii) received from
Beard Miller disclosures  regarding the independence of Beard Miller as required
by  Independence  Standards Board Standard No. 1 and discussed with Beard Miller
its  independence.  Based on the  foregoing  review and  discussions,  the Audit
Committee  recommended  to the Board of  Directors  that the  audited  financial
statements  be  included  in the  Company's  Annual  Report on Form 10-K for the
fiscal year ended June 30, 2005.

                   Audit Committee: John F. McGovern (Chair),
               John J. Mazur, Jr., Joseph P. Mazza, John F. Regan

Director Nomination Process

         The Nominating  Committee,  currently  consisting of Directors McClane,
McGovern and Mazur,  is  responsible  for the annual  selection of  management's
nominees for election as directors.  Each member of the Nominating  Committee is
independent in accordance with the listing standards of the Nasdaq Stock Market.
This committees operates under a written charter, which governs its composition,
responsibilities  and operations.  A copy of the Nominating Committee charter is
attached as Appendix B to this proxy statement.

         The  Nominating  Committee  met one time during the year ended June 30,
2005.

         The  Company  does  not pay fees to any  third  party  to  identify  or
evaluate or assist in identifying or evaluating potential nominees.  The process
for  identifying  and  evaluating  potential  nominees  of  the  Board  includes
soliciting  recommendations  from  directors and officers of the Company and its
wholly-owned subsidiary,  Kearny Federal Savings Bank.  Additionally,  the Board
may consider  persons  recommended by  stockholders  of the Company in selecting
nominees of the Board for election as directors.  The manner of  evaluation  for
all potential nominees is the same.

         The charter states that the Committee will seek nominees with excellent
decision-making ability, business experience, personal integrity and a favorable
reputation, who are knowledgeable about the business activities and market areas
in which the Company and its subsidiaries engage.

          The  Committee's  process for  identifying  and  evaluating  potential
nominees will include soliciting  recommendations from directors and officers of
the  Company and its  wholly-owned  subsidiary,  Kearny  Federal  Savings  Bank.
Additionally, the Committee will consider persons recommended by shareholders of
the Company in selecting the individuals  the Committee  recommends to the Board
for selection as the

                                       -8-



Board's nominees.  The Committee will evaluate persons  recommended by directors
or  officers  of  the  Company  or  Kearny  Federal  Savings  Bank  and  persons
recommended by shareholders in the same manner.

         To be  considered  in the  Committee's  selection  of  individuals  the
Committee  recommends  to the  Board  for  selection  as the  Board's  nominees,
recommendations  from shareholders must be received by the Company in writing by
at least 120 days prior to the date the proxy  statement for the previous year's
annual meeting was first  distributed to  shareholders.  Recommendations  should
identify the submitting  shareholder,  the person  recommended for consideration
and the reasons  the  submitting  shareholder  believes  such  person  should be
considered.

         Kearny Financial Corp.'s bylaws provide that any stockholder wanting to
make a  nomination  for the election of directors or a proposal for new business
at a meeting of stockholders must send written notice to the Secretary of Kearny
Financial  Corp. at least five days before the date of the annual  meeting.  The
bylaws further  provide that if a stockholder  wanting to make a nomination or a
proposal  for new  business  does not  follow  the  prescribed  procedures,  the
proposal will not be considered until an adjourned,  special,  or annual meeting
of the  stockholders  taking  place thirty days or more  thereafter.  Management
believes  that it is in the best  interests of Kearny  Financial  Corp.  and its
stockholders  to provide enough time for management to disclose to  stockholders
information  about a dissident slate of nominations for directors.  This advance
notice  requirement  may also give management time to solicit its own proxies in
an attempt to defeat any dissident slate of nominations if management  thinks it
is in the best interest of stockholders generally.  Similarly,  adequate advance
notice  of  stockholder  proposals  will  give  management  time to  study  such
proposals and to determine  whether to recommend to the  stockholders  that such
proposals be adopted.

Stockholder Communications

         The Board of Directors does not have a formal process for  stockholders
to send  communications  to the Board. In view of the infrequency of stockholder
communications  to the Board of  Directors,  the Board does not  believe  that a
formal process is necessary. Written communications received by the Company from
stockholders  are shared  with the full  Board no later than the next  regularly
scheduled  Board meeting.  The Board  encourages  directors to attend the annual
meeting of stockholders.

Certain Relationships and Related Transactions

         No directors,  officers or their immediate  family members were engaged
in transactions  with the Company or any subsidiary  involving more than $60,000
(other than  through  loans with the Bank)  during the years ended June 30, 2005
and 2004.

         The Bank makes loans to its  officers,  directors  and employees in the
ordinary course of business.  Such loans are on substantially the same terms and
conditions as those of comparable transactions prevailing at the time with other
persons.  Such loans do not include more than the normal risk of  collectability
or present other unfavorable features.

                                       -9-



--------------------------------------------------------------------------------
                   DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
--------------------------------------------------------------------------------

Compensation of Directors

         Board Fees.  Directors  are  currently  paid a fee of $1,250 per Kearny
Federal  Savings Bank board meeting  attended,  $600 per Kearny  Financial Corp.
meeting attended and $600 per Kearny MHC meeting  attended.  The chairman of the
board receives a higher fee of $1,500,  $720 and $720, for bank, holding company
and mutual holding company meetings, respectively.

         Members of the Kearny  Federal  Savings Bank  Executive  Committee  are
currently paid $1,200 per committee meeting attended;  the chairman of the board
receives a higher fee of $1,440 for Executive Committee meetings. Each member of
the  Kearny  Federal  Savings  Bank Board of  Directors  is also a member of the
Executive  Committee.  Members  of the  Audit  &  Compliance  Committee  and the
chairman  of this  committee  are paid  $250 and  $350,  respectively,  for each
meeting attended. Members of the Compensation Committee and the chairman of this
committee are paid $250 and $300,  respectively,  for each meeting attended. The
Administrative  Building  Construction  Committee  and the Branch  Renovation  &
Construction  Committee are ad hoc committees,  and members of these  committees
are paid $250 per meeting attended.

         Directors  also  receive an annual  retainer  as  follows:  $32,000 for
service on Kearny  Federal  Savings  Bank's board,  $9,000 for service on Kearny
Financial  Corp.'s  board and $9,000  for  service on Kearny  MHC's  board.  The
aggregate  fees paid to the  directors  for the year  ended  June 30,  2005 were
$762,600.  Directors who also serve as employees do not receive  compensation as
directors.

         Directors  Consultation  and Retirement  Plan.  Kearny  Financial Corp.
maintains a Directors  Consultation  and Retirement Plan (the "DCRP").  The DCRP
provides  retirement benefits to the directors of Kearny Financial Corp., Kearny
MHC and Kearny Federal Savings Bank based upon the number of years of service as
a  director.  To be  eligible  to receive  benefits  under the DCRP,  a director
generally  must have  completed  at least 5 years of service and must not retire
from the board prior to reaching 60 years of age. If a director agrees to become
a consulting  director upon retirement,  he will receive a monthly payment equal
to 2.5% of the total  retainer  plus fees paid for  attendance  at  regular  and
special  meetings and meetings of the executive  committee paid to him by Kearny
Financial Corp.,  Kearny MHC and Kearny Federal Savings Bank during the 12-month
period  prior to the date of  retirement  multiplied  by the  number of years of
service as a director,  not to exceed 80% of board compensation.  Benefits under
the DCRP begin upon a  director's  retirement  and are paid for life;  provided,
however,  that in the event of a  director's  death  prior to the receipt of 120
monthly payments,  payments shall continue to the director's surviving spouse or
estate  until 120  payments  have been made.  In the event  there is a change in
control (as defined in the DCRP),  all directors will be presumed to be eligible
to receive  benefits  under the DCRP and each  director  will receive a lump sum
payment equal to the present value of future  benefits  payable.  Benefits under
the DCRP are unvested and forfeitable  until  retirement at or after age 60 with
at least 5 years of  service,  termination  of  service  following  a change  in
control, disability following at least 5 years of service or death. For the year
ended June 30, 2005, payments made under the DCRP totaled $89,300.

Executive Compensation

     Summary  Compensation  Table.  The following  table sets forth the cash and
non-cash  compensation  awarded to or earned by Kearny  Financial  Corp.'s Chief
Executive Officer and certain other officers of

                                      -10-



Kearny  Financial Corp. or Kearny Federal Savings Bank for the fiscal year ended
June 30, 2005. All compensation was paid by Kearny Federal Savings Bank.



                                                      Annual Compensation(1)
                                                      ----------------------
                                             Fiscal                              All Other
Name and Principal Position                   Year      Salary      Bonus       Compensation
---------------------------                   ----      ------      -----       ------------
                                                                           
John N. Hopkins, President and                2005    $488,861    $112,500        $8,573(2)
Chief Executive Officer

Albert E. Gossweiler, Senior Vice             2005     186,976      45,750        $6,049(3)
President and Chief Financial Officer

Allan Beardslee, Senior Vice President        2005     186,495      36,600        $6,467(4)
of Information Technology

William C. Ledgerwood, Senior Vice            2005     180,354      51,000        $5,056(5)
President, Treasurer and Chief
Accounting Officer

Erika Sacher Parisi, Senior Vice President    2005     180,354      51,000        $5,511(6)
and Branch Administrator


--------------
(1)  Compensation  information for the fiscal years ended June 30, 2004 and June
     30, 2003 is omitted  because the Company was not a reporting  company under
     section 13(a) or 15(d) of the Securities  Exchange Act of 1934 during those
     periods. Certain executive officers are provided with non-cash benefits and
     perquisites,  such  as  use of  company  owned  and  leased  vehicles.  The
     aggregate value of such non-cash benefits for the year ending June 30, 2005
     did not exceed the  lesser of  $50,000 or 10% of the  aggregate  salary and
     bonus for any officer.
(2)  Consists of an employer  contribution to the 401(k) Plan for Mr. Hopkins of
     $6,251 and $2,322 for payment of life insurance premium.
(3)  Consists of an employer  contribution to the 401(k) Plan for Mr. Gossweiler
     of $4,418 and $1,631 for payment of life insurance premium.
(4)  Consists of an employer  contribution to the 401(k) Plan for Mr.  Beardslee
     of $5,595 and $872 for payment of life insurance premium.
(5)  Consists of an employer  contribution to the 401(k) Plan for Mr. Ledgerwood
     of $4,256 and $800 for payment of life insurance premium.
(6)  Consists of an employer  contribution  to the 401(k) Plan for Ms. Parisi of
     $5,163 and $348 for payment of life insurance premium.

         Employment Agreements.  Kearny Federal Savings Bank has entered into an
employment agreement with Mr. Hopkins, pursuant to which his minimum base salary
is $540,000.  Mr. Hopkins' employment agreement has a term of three years, which
commenced on July 1, 2004, and may be extended on or before each  anniversary of
the  effective  date  upon  determination  of the Board of  Directors  of Kearny
Federal Savings Bank that his performance has met the requirements and standards
of the Board. Pursuant to the terms of Mr. Hopkins' employment agreement,  he is
generally  entitled to participate  in all  discretionary  bonuses,  pension and
other  retirement  benefit  plans,  welfare  benefit  plans  and  other  equity,
incentive and benefit plans and perquisites  applicable to senior  management of
Kearny Federal  Savings Bank.  Upon his termination of employment at any time on
or  after  attainment  of age 62 and  until he  becomes  eligible  for  Medicare
coverage, Mr. Hopkins is permitted to continue to participate, at Kearny Federal
Savings Bank's expense, in the group medical plan sponsored by the Bank.

         If Kearny Federal  Savings Bank  terminates Mr. Hopkins without "cause"
as defined in the agreement,  he will be entitled to (i) a  continuation  of his
salary from the date of termination through the remaining term of the agreement,
and (ii) during the same period, the cost of obtaining health, life,

                                      -11-



disability and other benefits at levels substantially equal to those provided on
the date of termination of employment.  If Mr. Hopkins' employment is terminated
involuntarily  during the term of the agreement following a "change in control,"
as defined in the agreement,  of Kearny Federal Savings Bank or Kearny Financial
Corp. or without cause within  twenty-four months following a change in control,
he will be paid an amount  equal to 2.999  times his  five-year  average  annual
taxable cash compensation in a lump sum and be entitled to continued medical and
dental coverage for the remainder of the term. Mr. Hopkins will also be entitled
to the  foregoing  change  in  control  severance  payment  and  benefits  if he
voluntarily  terminates his employment  within 120 days following certain events
during the term of the agreement following a change in control of Kearny Federal
Savings  Bank or Kearny  Financial  Corp.  All amounts  payable as  severance in
respect of a change in control will be reduced to the extent necessary such that
neither the payments under the  employment  agreement,  nor any other  payments,
constitute  "excess  parachute  payments"  under  Section  280G of the  Internal
Revenue Code of 1986, as amended.  If a change in control  payment had been made
under Mr. Hopkins  agreement as of June 30, 2005, the payment would have equaled
approximately $1,619,460.

         Kearny Federal Savings Bank has also entered into employment agreements
with Senior Vice Presidents  Gossweiler,  Beardslee,  Ledgerwood and Parisi, the
named  executive  officers whose  compensation  is presented in the table above,
providing  for a  minimum  base  salary  of  $195,000,  $194,000,  $195,000  and
$195,000,  respectively.  These agreements each have a term of two years,  which
commenced on July 1, 2004,  and each  provides  for  extension of the term on or
before each anniversary of the effective date upon determination of the Board of
Directors of Kearny Federal Savings Bank that the officer's  performance has met
its  requirements  and  standards.  Pursuant  to the  terms  of  the  employment
agreements,   each  officer  is  generally   entitled  to   participate  in  all
discretionary  bonuses,  pension and other  retirement  benefit  plans,  welfare
benefit  plans and other equity,  incentive  and benefit  plans and  perquisites
applicable to senior management of Kearny Federal Savings Bank. Upon termination
of employment at any time on or after attainment of age 62 and until eligibility
for Medicare  coverage,  each of the  officers is also  permitted to continue to
participate, at Kearny Federal Savings Bank's expense, in the group medical plan
sponsored by the Bank.

         If terminated without cause, each of these officers will be entitled to
(i) a  continuation  of his or her  salary  through  the  remaining  term of the
agreement,  and (ii) during the same period, the cost of obtaining health, life,
disability and other benefits at levels substantially equal to those provided on
the date of termination of employment.  If terminated  involuntarily  during the
term of the  agreement  following  a "change  in  control,"  as  defined  in the
agreement,  of Kearny Federal Savings Bank or Kearny  Financial Corp. or without
cause within  twenty-four  months  following a change in control,  each of these
officers  will be paid an amount equal to 2.0 times his or her most recent total
annual compensation (including the value of deferred compensation and retirement
plans) in a lump sum and be entitled to  continued  medical and dental  coverage
for the remainder of the term. Each of the officers will also be entitled to the
foregoing  change in control  severance  payment and  benefits  upon a voluntary
termination of employment  within 120 days  following  certain events during the
term of the agreement  following a change in control of Kearny  Federal  Savings
Bank or Kearny  Financial  Corp.  All amounts  payable to any of the officers as
severance  in  respect  of a change in  control  will be  reduced  to the extent
necessary such that neither the payments under the employment agreement, nor any
other payments, constitute "excess parachute payments" under Section 280G of the
Internal  Revenue Code of 1986,  as amended.  If change in control  payments had
been made under these  agreements as of June 30, 2005,  the payments  would have
equaled approximately $390,000, $388,000, $390,000 and $390,000, for Senior Vice
Presidents Gossweiler,  Beardslee, Ledgerwood and Parisi, respectively. The Bank
has also entered  into  employment  agreements  with the three other senior vice
presidents.  If change in control  payments had been made under these agreements
as of June 30, 2005,  the  aggregate  payment  would have equaled  approximately
$1.04 million.

                                      -12-



         Pension Plan.  Kearny Federal Savings Bank is a participating  employer
in a  multiple-employer  pension plan  sponsored by the  Financial  Institutions
Retirement Fund (the "Pension  Plan").  All full-time  employees of the Bank are
eligible to  participate  after one year of service and  attainment of age 21. A
qualifying employee becomes fully vested in the Pension Plan upon the earlier of
completion of five years service or attainment of the normal  retirement  age of
65. The Pension Plan is intended to comply with the Employee  Retirement  Income
Security  Act of 1974,  as amended  ("ERISA").  The Pension  Plan  provides  for
monthly  payments to each  participating  employee at normal  retirement  age. A
participant  who is vested in the Pension Plan may take an early  retirement and
elect to receive a reduced  monthly  benefit  beginning  as early as age 45. The
Pension Plan also provides for payments in the event of disability or death. The
annual benefit amount upon retirement at age 65 equals 2% times years of service
times a participant's highest five year average salary.  Benefits are payable in
the form of a monthly  retirement  benefit and a death benefit or an alternative
form  that is  actuarially  equivalent.  At June  30,  2005,  Officers  Hopkins,
Gossweiler,  Beardslee, Ledgerwood and Parisi had 29 years, 6 years, 29 years, 7
years and 6 years, respectively,  of credited service under the Pension Plan and
had a current highest five year average salary of $354,300,  $170,901, $174,800,
$142,001 and $139,000, respectively.

         Benefit  Equalization  Plan.  Kearny Federal Savings Bank has adopted a
Benefit  Equalization  Plan (the "BEP").  The purpose of the BEP is to provide a
pension  benefit based upon the actual  earnings of senior  officers of the Bank
(President,   Executive   Vice   Presidents,   Vice   Presidents  and  Corporate
Secretaries)  in the event  that  their  average  annual  earnings  exceeds  the
permissible pensionable earnings level under the Pension Plan as required by the
limitations  of Sections  401(a)(17)  and 415 of the Internal  Revenue Code. The
supplemental  pension for President and Chief Executive  Officer John N. Hopkins
and other  senior  officers  whose  highest five year annual  earnings  prior to
retirement  will  include  years in which  such  earnings  exceed  the limits of
Sections  401(a)(17)  and  415 of the  Internal  Revenue  Code  will  receive  a
supplemental  benefit based upon the difference  between their average  earnings
taking  into effect  this  maximum  pensionable  earnings  limitation  and their
average earnings without regard to such limitation, multiplied by 2% times their
years of service at  retirement.  The benefits  payment under the BEP will be in
the form of an annual benefit  payable for life and a death benefit,  unless the
committee  administering  the BEP  authorizes  an  alternative  form of benefit.
During the year ended June 30, 2005, there was approximately $59,800 of benefits
paid to retired  participants  under the BEP.  For the year ended June 30, 2005,
financial reporting expense accrued under the BEP totaled $385,800.

         The following table sets forth the estimated  annual  benefits  payable
under (i) the Pension  Plan and (ii) the Benefit  Equalization  Plan,  described
above, upon retirement at age 65 as of June 30, 2005, expressed in the form of a
life  annuity,  for the average  annual  earnings  described  above and years of
service  specified.  Such amounts are in addition to any benefits  payable under
Social Security.

                                      -13-




                            Creditable Years of Service at Age 65
                            -------------------------------------
  Average          15          20            25          30           35
Annual Wages
================================================================================
$25,000           $7,500    $10,000       $12,500     $15,000      $17,500
$50,000          $15,000    $20,000       $25,000     $30,000      $35,000
$75,000          $22,500    $30,000       $37,500     $45,000      $52,500
$100,000         $30,000    $40,000       $50,000     $60,000      $70,000
$150,000         $50,000    $60,000       $75,000     $90,000     $105,000
$200,000         $60,000    $80,000      $100,000    $120,000     $140,000
$300,000         $90,000   $120,000      $150,000    $180,000     $210,000
$400,000        $120,000   $160,000      $200,000    $240,000     $280,000
$550,000        $165,000   $220,000      $275,000    $330,000     $385,000

         Benefits  Equalization  Plan for Employee Stock Ownership Plan.  Kearny
Federal  Savings  Bank  has  implemented  for its  senior  officers  a  benefits
equalization plan related to the employee stock ownership plan. The participants
under this plan are the same as the participants under the benefits equalization
plan  related to the Kearny  Federal  Savings  Bank's  Pension  Plan.  This plan
provides  participating  executives  with benefits  otherwise  limited under the
employee  stock  ownership  plan by Sections  401(a)(17) and 415 of the Internal
Revenue Code. For example,  this plan provides  participants  with a benefit for
any  compensation  that  they  may  earn in  excess  of  $205,000  (as  indexed)
comparable to the benefits earned by all  participants  under the employee stock
ownership plan for compensation  earned below that level. Kearny Federal Savings
Bank may utilize a grantor  trust in  connection  with this plan in order to set
aside funds that  ultimately  may be used to pay  benefits  under the plan.  The
assets of the grantor trust will remain  subject to the claims of Kearny Federal
Savings  Bank's general  creditors in the event of  insolvency,  until paid to a
participant  following  termination of employment  according to the terms of the
plan.  Benefits  under the plan will be paid in a lump sum in the form of Kearny
Financial  Corp.  Common  Stock  to  the  extent  permissible  under  applicable
regulations, or in the alternative, benefits will be paid in cash based upon the
value of such Kearny Financial Corp.  Common Stock at the time that such benefit
payments are made.  The actual value of benefits  under this plan and the annual
financial  reporting expense  associated with this plan are calculated  annually
based upon a variety of factors,  including  the actual  value of  benefits  for
participants  determined  under the employee stock ownership plan each year, the
applicable  limitations  under the  Internal  Revenue  Code that are  subject to
adjustment  annually  and the  compensation  of each  participant  at such time.
Generally,  benefits under the plan are taxable to each  participant at the time
of receipt of such payment,  and Kearny  Federal  Savings Bank will  recognize a
tax-deductible compensation expense at such time.

Compensation Committee Report on Executive Compensation

         The   Compensation   Committee  of  the  Company   (the   "Compensation
Committee") consists of Directors Aanensen (Chair), Mazur, Mazza and Parow, each
of whom is an independent  director.  The members of the Compensation  Committee
also  serve  on  the  Compensation  Committee  of  the  Bank.  The  Compensation
Committee,  at the  direction  of the  Board  of  Directors,  has  prepared  the
following report for inclusion in this Proxy Statement.

         The  Compensation  Committee is  responsible  for  conducting  periodic
reviews of the executive compensation of senior executives,  including the Chief
Executive Officer ("CEO").  The Compensation  Committee determines salary levels
for senior  executives  and other  officers  and  amounts of cash  bonuses to be
distributed to those individuals,  if and as appropriate.  In the future, if the
Company implements a

                                      -14-



stock  option  plan and a  restricted  stock  program,  such  awards  to  senior
management and key employees under such stock-based  compensation  programs will
also be determined by the Compensation Committee.

         This report is submitted by the Compensation  Committee to the Board of
Directors of the Company to summarize the Compensation  Committee's  involvement
in the  compensation  decisions and policies adopted by the Bank and the Company
for  executive  officers  generally,  and for the  President  and  CEO,  John N.
Hopkins, in particular, during the fiscal year ended June 30, 2005.

         General Policy. The executive compensation practices of the Company and
the Bank are designed to reward and provide an incentive for  executives,  based
on the achievement of corporate and individual  goals.  Compensation  levels for
executives are established after considering  measures that include, but are not
limited to, the  financial  performance  of the Company  and  competitive  labor
market  conditions.  Furthermore,   qualitative  factors  such  as  overall  job
performance,  leadership,  teamwork, and community involvement are considered in
compensation   deliberations.   The  Compensation  Committee  utilized  publicly
available  information to gather information  related to compensation  practices
for executive  officers of financial  services  companies with assets of between
$1.5  billion  and $4.0  billion  located in New  Jersey and in the  surrounding
states of New York and Pennsylvania within approximately 75 miles of Kearny, New
Jersey. The Compensation  Committee has complete access to all necessary Company
personnel records, financial reports, and other data.

         Components of Compensation.  In evaluating executive compensation,  the
Compensation  Committee  concentrates on three fundamental  components:  salary,
incentive bonus compensation and retirement income opportunity.

         Salary levels for senior  executives and other officers are reviewed by
the  Compensation  Committee  on an  annual  basis.  Salary  levels  reflect  an
individual's   job   responsibilities,   experience  and   performance  and  the
Compensation Committee's analysis of competitive marketplace conditions.

         In  the  past,  incentive  bonuses  have  been  used  to  provide  cash
distributions  to executives,  depending  upon a variety of factors  relating to
Company  and  Bank   performance  and  individual   performance.   Although  the
Compensation  Committee's decisions are discretionary and no specific individual
goals were set, the general factors that were used to determine bonuses were the
individual's  contribution  to the  Company's  and the Bank's  success since the
executive's last evaluation and the  demonstrated  capacity to adapt to meet the
future needs of each.  No  particular  weightings  of these factors were used to
calculate bonuses. In addition, since 2002, a portion of such bonus pay has been
determined  based upon the growth of the  business  of the Company and the Bank.
The level of such incentive compensation is determined by the Board of Directors
based  upon  various   factors,   including  the  size  and  complexity  of  the
transaction,  the projected  financial and strategic benefits of the transaction
to the future  financial  and business  operations  of the Bank,  the  projected
benefits of the  transaction as revised after the completion of the  transaction
compared with the projected benefits of the transaction presented at the time of
initial  evaluation  of  the  transaction  by  management  and  the  Board,  and
individual  contribution  to the successful  completion  and  integration of the
transaction into the on-going business of the Company. The Plan is designated to
maximize the achievement of the Company's and the Bank's objectives by providing
incentive  compensation to those  individuals  who play an instrumental  role in
defining  and  then  achieving  or  exceeding  specific  previously   determined
organizational business objectives of the Company.

         Another component of the executive compensation strategy of the Company
and the Bank is the retirement income  opportunity.  Presently,  such retirement
income  opportunity  involves  the Bank's  defined  benefit  pension  plan,  the
Benefits  Equalization  Plan, the Bank's 401K plan and the Bank's Employee Stock
Ownership Plan ('ESOP") and related ESOP Benefits Equalization Plan. At a future
date, we anticipate the addition of stock-based  incentive programs as a further
enhancement  to our retirement  income  opportunity  and long-term  compensation
strategy. Through the use of such stock-based incentive programs, executives

                                      -15-



may receive stock options and  restricted  stock awards that will offer them the
possibility  of future  compensation  opportunity  depending on the  executive's
continued  employment  with the  Company  and the Bank and the  long-term  price
appreciation of the Company's Common Stock.

         Committee   Review   of   Executive   Compensation.   In   making   its
recommendations  regarding executive compensation at calendar year-end 2004, the
Compensation Committee was influenced by several positive factors. Primary among
these  were  the  exceptional  financial  performance  of the  Company  and  the
significant  role of the  Company's  executive  officers  in  bringing it about.
Additional  accomplishments,  less measurable in quantitative  form but of equal
importance  to  the  Company  and  the  Bank,  included  advances  in  strategic
direction, strengthened internal controls, and regulatory compliance.

         Based upon these performance  factors, the Company's executive officers
were awarded salary increases to be effective as of January 1, 2005, and bonuses
paid in December 2004.

         Compensation of the Chief Executive Officer.  In assessing  appropriate
types  and  amounts  of  compensation  for the CEO,  the  Board  evaluates  both
corporate  and  individual  performance.  Corporate  factors  included  in  such
evaluation are: return on average assets, the level of the efficiency ratio, and
the market performance of the Common Stock. Individual factors include the CEO's
initiation and implementation of successful business strategies;  maintenance of
an  effective  management  team;  and  various  personal  qualities,   including
leadership, commitment, and professional and community standing.

         After  reviewing the Company's  calendar year 2004 results,  as well as
his individual contributions, the Compensation Committee concluded that the CEO,
John N. Hopkins,  performed  with  exceptional  skill and diligence in 2004. The
Company generated  earnings and business growth in accordance with the Company's
budget and  operating  plans,  and Mr.  Hopkins  deserves a large measure of the
credit for this  leadership  role in the Company's  accomplishments.  He assumed
personal   responsibility  for  an  array  of  ambitious  operating  strategies,
including efforts to raise additional  capital through the sale of Company stock
to  the  public,  completion  of  the  new  administrative  offices  located  in
Fairfield,  New Jersey and  completion of the  integration  of the operations of
West Essex Bank and Pulaski  Savings Bank with those of the Bank.  Finally,  the
Compensation   Committee   believes  that  Mr.  Hopkins  has  made   significant
contributions  to the ongoing success of the Company and the Bank, and continues
to set the stage for their continued success.

         Accordingly,  Mr.  Hopkins'  salary  was  increased  from  $450,000  to
$540,000,  effective  January 1, 2005, and he was awarded a bonus of $112,500 in
December 2004.

         The Compensation Committee:
                  Theodore J. Aanensen (Chairman)
                  John J. Mazur, Jr.
                  Joseph P. Mazza
                  Henry S. Parow

                                      -16-



Stock Performance Graph

         Set forth below is a stock  performance  graph comparing the cumulative
total  shareholder  return on the Company's Common Stock with (a) the cumulative
total shareholder return on stocks included in the NASDAQ U.S. Market Index, (b)
the cumulative total shareholder return on stocks included in the SNL Thrift $1B
- $5B Index and (c) the cumulative total  shareholder  return on stocks included
in the SNL MHC Index, in each case assuming an investment of $100 as of February
24, 2005 (the date the Company's  Common Stock began trading on the NASDAQ Stock
Market  following the closing of the Company's  initial public stock  offering).
The  cumulative  total  returns  for  the  indices  are  computed  assuming  the
reinvestment  of dividends that were paid during the period.  It is assumed that
the  investment  in the  Company's  Common Stock was made at the initial  public
offering price of $10.00 per share. The

                                [GRAPHIC OMITTED]

=======================================================================
                                               2/24/05       6/30/05
-----------------------------------------------------------------------
Nasdaq U.S. Market Index                         $100          $101
-----------------------------------------------------------------------
SNL Thrift $1B - $5 B Index                       100           101
-----------------------------------------------------------------------
SNL MHC Index                                     100           101
-----------------------------------------------------------------------
Kearny Financial Corp.                            100           118
=======================================================================

         The NASDAQ U.S. Market Index was prepared by the Center for Research in
Security  Prices (CRSP) at the  University of Chicago,  and the SNL indices were
prepared by SNL Securities, LC, Charlottesville,  Virginia. The SNL Thrift $1B -
$5B Index  includes  all thrift  institutions  with total  assets  between  $1.0
billion and $5.0 billion.  The SNL MHC Index includes all publicly traded mutual
holding companies.

         There can be no assurance that the Company's  future stock  performance
will be the same or similar to the  historical  stock  performance  shown in the
graph above.  The Company neither makes nor endorses any predictions as to stock
performance.

                                      -17-



--------------------------------------------------------------------------------
              PROPOSAL II - APPROVAL OF THE KEARNY FINANCIAL CORP.
                   2005 STOCK COMPENSATION AND INCENTIVE PLAN
--------------------------------------------------------------------------------

         General.  The Board of Directors has adopted the Kearny Financial Corp.
2005 Stock Compensation and Incentive Plan (the "Plan"),  subject to approval by
the Company's stockholders. The purpose of the Plan is to provide incentives and
rewards to officers,  employees and directors that contribute to the success and
growth of the Company and its  Affiliates,  and to assist all these  entities in
attracting  and retaining  directors,  executives  and other key employees  with
experience and ability.  The following  summary of the material  features of the
Plan is qualified in its entirety by reference to the complete provisions of the
Plan which is attached hereto as Appendix C. The Plan has been drafted to comply
with regulations of the Office of Thrift  Supervision (the "OTS")  applicable to
stock  benefit  plans  established  or  implemented  within  one year of a stock
issuance by a financial institution under a mutual holding company structure.

         Administration.   The  Board  of   Directors   of  the  Company  or  an
administrative  committee comprised of not less than two non-employee  directors
will  administer  the Plan.  Members  of the  Committee  shall be  "Non-Employee
Directors" within the meaning of Rule 16b-3 under to the Securities Exchange Act
of 1934,  as amended  (the  "Exchange  Act").  A majority  of the members of the
Committee shall  constitute a quorum and the action of a majority of the members
present at any  meeting at which a quorum is present  shall be deemed the action
of the Committee.

         Subject to certain regulatory requirements  implemented by the OTS with
respect to plan administration, the Committee has broad authority under the Plan
with respect to Awards granted thereunder,  including,  without limitation,  the
authority to:

          o    select the individuals to receive Awards under the Plan;

          o    determine  the  type,  number,  vesting  requirements  and  other
               features and conditions of individual Awards;

          o    interpret  the Plan and Award  Agreements  issued with respect to
               individual Awards; and

          o    make all other decisions related to the operation of the Plan.

         Each Award  granted under the Plan will be evidenced by a written award
agreement that sets forth the terms and conditions of each Award and may include
additional provisions and restrictions as determined by the Committee.

         Eligibility.  Subject to the terms of the Plan, officers, employees and
outside directors of the Company,  as the Committee shall determine from time to
time, shall be eligible to receive Awards in accordance with the Plan.

         Shares of Common Stock Subject to the Plan;  Share Limits.  The maximum
number of shares of the Company  Common Stock that may be delivered  pursuant to
Awards under the Plan is 4,989,792 shares. The following additional share limits
are also contained in the Plan:

         Of the 4,989,792  shares,  the Company may grant a maximum of 3,564,137
shares upon the exercise of Stock Options.

                                      -18-



         Of the 4,989,792  shares,  the Company may grant a maximum of 1,425,655
shares as Restricted Stock Awards.

         To the  extent  that an Award is  settled  in cash or a form other than
shares of Common Stock, the shares that would have been delivered had there been
no such cash or other  settlement  shall be counted against the shares available
for issuance under the Plan. Shares that are subject to or underlie Awards which
expire or for any reason are  canceled or  terminated,  are  forfeited,  fail to
vest,  or for any other  reason are not paid or  delivered  under the Plan shall
again be available for subsequent Awards under the Plan.

         Awards.  The Plan  authorizes  grants of Stock  Options and  Restricted
Stock Awards. Such Awards may be made by the Committee or in accordance with the
specific terms of the Plan.

         Stock Option  Awards.  A Stock Option gives the  recipient the right to
purchase  shares of Common Stock at a future date at a specified price per share
(the "exercise  price").  The per share exercise price of a Stock Option may not
be less than the Fair  Market  Value of a share of  Common  Stock on the date of
grant. For the purposes of the Plan, "Fair Market Value" means the closing sales
price  reported on the Nasdaq  National  Market (as published by The Wall Street
Journal,  if  published)  on such date or, if the Common Stock was not traded on
such date, on the immediately preceding day on which the Common Stock was traded
thereon.  The Committee may impose  additional  conditions  upon the right of an
optionee to exercise any Option  granted  hereunder  which are not  inconsistent
with the  terms of the  Plan.  If such  Option  is  intended  to  qualify  as an
Incentive  Stock  Option,  within the  meaning of  Section  422 of the  Internal
Revenue  Code,  then such Awards will also comply with  additional  restrictions
under  Section 422 of the Internal  Revenue Code as set forth in the Plan.  (See
"Federal Income Tax Treatment of Awards under the Plan" below).

         No shares of Common  Stock may be issued upon the exercise of an Option
until the  Company has  received  full  payment of the  exercise  price,  and no
optionee  shall have any of the rights of a  stockholder  of the  Company  until
shares of Common  Stock are issued to such  optionee.  Upon the  exercise  of an
Option  by  an  optionee  (or  the  optionee's  personal  representative),   the
Committee,  in its sole and absolute discretion,  may make a cash payment to the
optionee,  in whole or in part,  in lieu of the  delivery  of  shares  of Common
Stock. Such cash payment to be paid in lieu of delivery of Common Stock shall be
equal to the difference between the Fair Market Value of the Common Stock on the
date of the Option exercise and the exercise price per share of the Option. Such
cash payment shall be in exchange for the cancellation of such Option. Such cash
payment  shall not be made in the event that such  transaction  would  result in
liability to the optionee and the Company  under  Section  16(b) of the Exchange
Act or any related regulations promulgated thereunder.

         Pursuant  to the  terms of the Plan,  Non-Statutory  Stock  Options  to
purchase  shares of Common  Stock as  detailed  below  will be  granted  to each
outside director of the Company,  as of the Effective Date, at an exercise price
equal to the  Fair  Market  Value of the  Common  Stock on such  date of  grant.
Options may be granted to newly  appointed or elected outside  directors  within
the sole  discretion of the Committee,  and the exercise price shall be equal to
the Fair Market Value of such Common Stock on the date of grant.  Twenty percent
of the Options granted to outside  directors on the Effective Date will be first
exercisable  on the  one  year  anniversary  of the  date of the  grant  and 20%
annually  thereafter on the anniversary  date of the award during such period of
service as a director or a director  emeritus.  Such Options  granted to outside
directors  will remain  exercisable  for up to ten years from the date of grant.
Upon the death or  disability of a director or director  emeritus,  such Options
shall be deemed  immediately  100%  exercisable  for their  remaining  term. All
outstanding  Options become immediately  exercisable in the event of a Change in
Control of the Company or the Bank.

                                      -19-



         Restricted  Stock  Awards.  A  Restricted  Stock  Award is a grant of a
certain  number  of  shares  of Common  Stock  subject  to the lapse of  certain
restrictions   (such  as  continued   service)   determined  by  the  Committee.
Participants shall receive dividends and other  distributions  declared and paid
on the shares  subject to their  Restricted  Stock  Awards;  provided  that such
distribution  shall be held in  arrears  until the  underlying  shares  shall be
earned and non-forfeitable.

         Pursuant to the terms of the Plan, Restricted Stock Awards, as detailed
below,  will be granted  to each  outside  director  of the  Company,  as of the
Effective  Date of the Plan.  Twenty  percent  of the  Restricted  Stock  Awards
granted to outside  directors will be  exercisable  on the one year  anniversary
date of the Award and 20% annually thereafter during such period of service as a
director or director emeritus. Upon death or disability of the outside director,
such  Restricted  Stock Awards shall be deemed 100% earned and  non-forfeitable.
All outstanding  Restricted Stock Awards become 100% earned and  non-forfeitable
in the event of a Change in Control of the Company or the Bank. Restricted Stock
Awards may be  granted  to the newly  elected  or  appointed  outside  directors
subsequent to the Effective Date of the Plan.

         Vesting of Awards.  Awards  under the Plan  generally  will vest at the
rate of 20 percent per year over a period of five years  beginning one year from
the date of grant.  The Company  may,  however,  consider  acceleration  of such
vesting  schedule,  provided that such action is not contrary to the regulations
of the OTS then in effect.

         Award  Payouts.  The Company may make payouts  related to Awards in the
form of cash,  Common Stock or  combinations of cash and stock, as determined by
the Committee.

         Effect of  Termination of Service on Awards.  Generally,  the Committee
will  determine the impact of a termination of service upon an Award at the time
of such Award. Generally, except as may otherwise be determined by the Committee
at the time of the Award,  an Incentive Stock Option may only be exercised while
the  optionee  serves as an employee of the Company or within three months after
termination of employment for a reason other than death or disability (but in no
event after the expiration date of the Option).

         Effect of Death or Disability on Awards.  Generally, the Committee will
determine  the impact of death or  disability  upon an Award at the time of such
Award. In the event of the death or disability of an optionee during employment,
an exercisable  Incentive  Stock Option will continue to be exercisable  for one
year and two years,  respectively,  to the extent  exercisable  by the  optionee
immediately  prior to the optionee's death or disability but only if, and to the
extent that, the optionee was entitled to exercise such Incentive  Stock Options
on the date of termination of employment.

Specific Benefits Under the Plan

         The table below presents information related to Stock Option Awards and
Restricted  Stock  Awards to be awarded to outside  directors  upon  stockholder
approval of the Plan. The Plan provides that each outside  director will receive
133,655  stock  options  and 53,462  shares of  restricted  stock on the date of
stockholder approval of the Plan. In accordance with applicable OTS regulations,
all outside directors,  as a group, may not be awarded more than 30% of the Plan
reserve of either Stock  Options or Restricted  Stock Awards,  and no individual
outside  director  may receive more than 5% of the Plan reserve for either Stock
Options or Restricted Stock Awards. No specific determination has been made with
respect to Awards that may be made to the officers and employees of the Company.
It is anticipated  that the Committee will make a determination  related to such
Awards at a later date following the date of stockholder approval of the

                                      -20-




Plan. The Committee  will consider such  information as it deems
necessary and  appropriate  in making its  determination  related to any Awards,
including  job  responsibilities,   individual  and  Company  performance,   the
Company's compensation philosophy and programs, and stock compensation practices
by other financial institutions.



                                NEW PLAN BENEFITS
        Kearny Financial Corp. 2005 Stock Compensation and Incentive Plan
-------------------------------------------------------------------------------------------------------------------------
                                                            Stock Options                      Restricted Stock
-------------------------------------------------------------------------------------------------------------------------
                                                                       Number of                            Number
                                                                        Options                            of Shares
                                                       Dollar            to be               Dollar          to be
                                                       Value            Awarded              Value          Awarded
-------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Named Executive Officers:
John N. Hopkins, President and                           --              TBD(1)               --                 TBD(1)
   Chief Executive Officer                                                                                    
Albert E. Gossweiler, Senior Vice                        --              TBD(1)               --                 TBD(1)
   President and Chief Financial Officer                                                                      
Allan Beardslee, Senior Vice President                   --              TBD(1)               --                 TBD(1)
   of Information Technology                                                                                  
William C. Ledgerwood, Senior Vice                       --              TBD(1)               --                 TBD(1)
   President, Treasurer and Chief                                                                             
   Accounting Officer                                                                                         
Erika Sacher Parisi, Senior Vice President               --              TBD(1)               --                 TBD(1)
   and Branch Administrator                                                                                   
Directors:                                                                                                
Theodore J. Aanensen(6)                                  -- (2)      133,655(3)           $677,898(4)         53,462(5)
John J. Mazur, Jr.                                       -- (2)      133,655(3)           $677,898(4)         53,462(5)
Joseph P. Mazza(6)                                       -- (2)      133,655(3)           $677,898(4)         53,462(5)
Matthew T. McClane                                       -- (2)      133,655(3)           $677,898(4)         53,462(5)
John F. McGovern                                         -- (2)      133,655(3)           $677,898(4)         53,462(5)
Leopold W. Montanaro(6)                                  -- (2)      133,655(3)           $677,898(4)         53,462(5)
Henry S. Parow                                           -- (2)      133,655(3)           $677,898(4)         53,462(5)
John F. Regan(6)                                         -- (2)      133,655(3)           $677,898(4)         53,462(5)
Non-employee directors as a group                        -- (2)    1,069,240(3)         $5,423,184(4)        427,696(5)
Executive officers as a group                            --              TBD(1)                --                TBD(1)
Non-executive officer employees as a group               --              TBD(1)                --                TBD(1)
                                              
                                                    
----------------             
(1)  To be determined.  It is anticipated that if the Plan receives  stockholder
     approval,  Awards to officers and  employees  may be made by the  Committee
     during the calendar  quarter  ending  December 31, 2005,  however,  at this
     time, no assurances  can be made that such Awards will in fact be made, the
     recipient  of such  Awards,  or the  level of such  individual  Awards.  

                                      -21-



     In accordance with the OTS regulations,  no individual  officer or employee
     shall  receive  awards  in  excess of 25% of the  total  Stock  Options  or
     Restricted Stock Awards that may be issued under the Plan.
(2)  The exercise  price of such Options shall be equal to the Fair Market Value
     of the Common Stock on the date of award.  Thus, on the date of stockholder
     approval,  the Options  have no value for the  recipient.  The value of the
     Options  will  equal the  difference  between  the  exercise  price of such
     Options and the market price of the Common Stock on the date of exercise of
     an Option.  Accordingly,  the value to the  recipient  is not  determinable
     until the Option is exercised. 
(3)  Options awarded to outside directors are first exercisable at a rate of 20%
     on the one year  anniversary  of the  date of the  award  and 20%  annually
     thereafter  on the  anniversary  date of the award  during  such  period of
     service as a director or director  emeritus,  and shall remain  exercisable
     for ten years without regard to continued service as a director or director
     emeritus. Upon Disability,  Death, or a Change in Control of the Company or
     the Bank, such Awards shall be 100% exercisable. 
(4)  These values are based on the last reported sales price of the Common Stock
     on September 16, 2005,  which was $12.68 per share.  The exact dollar value
     of the restricted  shares granted will equal the market price of the Common
     Stock on the date of  vesting  of such  Awards.
(5)  All  Awards  presented  herein  shall be earned at a rate of 20% on the one
     year  anniversary  of the date of the Award and 20% annually  thereafter on
     the  anniversary  of the  date  of  the  Award.  All  Awards  shall  become
     immediately  100% vested upon Death or Disability or termination of service
     following a Change in Control of the Company or the Bank (as defined in the
     Plan).  Awards  shall  continue  to vest  during  periods  of service as an
     employee,  director,  or director  emeritus.
(6)  Nominee for election as a director.

         Acceleration of Awards.  Unless otherwise  determined by the Committee,
upon a Change in Control  of the  Company or the Bank,  each Stock  Option  then
outstanding  shall become fully vested and remain  exercisable for its remaining
term and all Restricted Stock Awards then outstanding  shall be fully vested, be
deemed earned and non-forfeitable and be free of restrictions.

         For the purposes of the Plan,  "Change in Control"  shall mean: (i) the
sale  of all,  or a  material  portion,  of the  assets  of the  Company  or its
Affiliates;  (ii) the merger or  recapitalization  of the  Company  whereby  the
Company is not the surviving  entity;  (iii) a change in control of the Company,
as otherwise defined or determined by the OTS or regulations  promulgated by it;
or (iv) the  acquisition,  directly or indirectly,  of the beneficial  ownership
(within the meaning of that term as it is used in Section  13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) of twenty-five percent
(25%) or more of the outstanding voting securities of the Company by any person,
trust,  entity  or  group.  The  term  "person"  refers  to an  individual  or a
corporation,  partnership,  trust, association,  joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically  listed herein. A Change in Control shall not include a transaction
whereby  Kearny MHC shall merge into the Company or the Bank and a new parent of
the Company or the Bank is formed.

         The power of the  Committee to  accelerate  the exercise of Options and
the  immediate  exercisability  of Options in the case of a Change in Control of
the Company  could have an  anti-takeover  effect by making it more costly for a
potential  acquiror to obtain control of the Company due to the higher number of
shares  outstanding  following  such  exercise  of  Options.  The  power  of the
Committee to make adjustments in connection with the Plan,  including  adjusting
the number of shares subject to Options and canceling Options, prior to or after
the occurrence of an  extraordinary  corporate  action,  allows the Committee to
adapt the Plan to operate in changed circumstances,  to adjust the Plan to fit a
smaller  or larger  institution,  and to permit the  issuance  of Options to new
management following such extraordinary corporate action. However, this power of
the Committee  also has an  anti-takeover  effect,  by allowing the Committee to
adjust the Plan in a manner to allow the  present  management  of the Company to
exercise more Options and hold more shares of the Company's Common Stock, and to
possibly  decrease  the number of Options  available  to new  management  of the
Company.

         Although the Plan may have an anti-takeover effect, the Company's Board
of Directors did not adopt the Plan specifically for anti-takeover purposes. The
Plan could render it more difficult to obtain support for stockholder  proposals
opposed by the  Company's  Board and  management  in that  recipients of 

                                      -22-



Options could choose to exercise such Options and thereby increase the number of
shares for which they hold voting  power.  Also,  the  exercise of such  Options
could  make it easier  for the Board and  management  to block the  approval  of
certain transactions.  In addition,  the exercise of such Options could increase
the cost of an acquisition by a potential acquiror.

         Adjustments.  As is customary in equity incentive plans of this nature,
each share limit and the number and kind of shares  available under the Plan and
any outstanding Awards as well as the exercise or purchase prices of Awards, are
subject to  proportional  adjustment  in the event of  certain  reorganizations,
mergers,  combinations,  recapitalizations,  stock  splits,  stock  dividends or
similar events that change the number or kind of shares outstanding,  as well as
in the case of  extraordinary  dividends  or  distributions  of  property to the
stockholders.  In the  event  of such an  adjustment  as  described  above,  the
Committee may, if it deems it appropriate and equitable under the circumstances,
make  provision  for a cash  payment  or for  the  assumption,  substitution  or
exchange  of any or all  outstanding  Awards,  based  upon the  distribution  or
consideration payable to holders of the Common Stock.

         Transfer Restrictions. Unless otherwise determined by the Committee, an
individual may not transfer, assign, hypothecate, or dispose of an Option in any
manner,  other than by will or the laws of intestate  succession.  The Committee
may provide for the transfer or assignment of a non-statutory stock option if it
determines  that  the  transfer  or  assignment  is for  valid  estate  planning
purposes.  The  recipient  of a  Restricted  Stock  Award  grant shall not sell,
transfer,  assign,  pledge,  or otherwise  encumber  shares subject to the grant
until full vesting of such shares has occurred.

         Amendment or Termination  of the Plan. The Committee may amend,  modify
or  terminate  the Plan,  except that no such  amendment  may have the effect of
repricing the exercise price of Options and any material  amendments to the Plan
shall be subject to a ratification vote by the Company's stockholders.

         In accordance  with OTS  regulations  applicable to stock benefit plans
established  or  implemented  within  one year  following  the  completion  of a
mutual-to-stock  conversion of a federally chartered savings institution such as
the Bank, the Plan contains  certain  restrictions  and  limitations,  including
among others,  provisions  requiring  the vesting of Awards  granted to occur no
more rapidly than ratably over a five-year period and the resultant  prohibition
against  accelerated  vesting of award  grants upon the  occurrence  of an event
other than the death or disability of the award recipient or a Change in Control
of the Company or the Bank.  The Company does not have any present  intention to
engage in any transaction that would result in the accelerated vesting of Awards
as  permitted  by  the  Plan,  however,   the  Board  has  determined  that  the
implementation  of  such  Plan  provisions  is in  the  best  interests  of  the
shareholders of the Company, as well as the officers, directors and employees of
the Company.

Federal Income Tax Treatment of Awards Under the Plan

         The following  discussion of the general tax  principles  applicable to
the Plan  summarizes  the  federal  income  tax  consequences  of the Plan under
current federal law, which is subject to change at any time. This summary is not
intended to be exhaustive  and,  among other  considerations,  does not describe
state or local tax consequences.

         Nonstatutory Stock Options.  The optionee generally  recognizes taxable
income in an amount equal to the  difference  between the Option  exercise price
and the Fair  Market  Value of the shares at the time of  exercise.  The Company
will receive a tax  deduction  equal to the ordinary  income  recognized  by the
optionee.  Employees exercising  non-statutory stock options are also subject to
federal, state, and local (if any) tax withholding on the option income. Outside
directors are not subject to tax withholding.

                                      -23-



         Incentive  Stock  Options.  The optionee  generally  does not recognize
taxable income upon exercise of an Incentive Stock Option.  If the optionee does
not dispose of the Common Stock acquired upon exercise for the required  holding
periods  of two  years  from  the date of  grant  and one year  from the date of
exercise,  income from a  subsequent  sale of the shares is treated as a capital
gain for tax purposes. However, the difference between the Option exercise price
and the Fair Market Value of the Common Stock on the date of Option  exercise is
an  item of tax  preference  which  may,  in  certain  situations,  trigger  the
alternative  minimum tax for an optionee.  However,  if the optionee disposes of
the shares prior to the expiration of the required holding periods, the optionee
has  made a  disqualifying  disposition  of  the  stock.  Upon  a  disqualifying
disposition,  the optionee will recognize taxable income equal to the difference
between the exercise price and the Fair Market Value of the Company Common Stock
on the date of exercise,  and the Company will receive a tax deduction  equal to
the ordinary income recognized by the optionee.  Currently, the Internal Revenue
Service does not require tax withholding on disqualifying dispositions.

         In accordance  with Section  162(m) of the Internal  Revenue Code,  the
Company's  tax  deductions  for  compensation  paid  to  the  most  highly  paid
executives named in the Company's Proxy Statement may be limited to no more than
$1 million per year,  excluding certain  "performance-based"  compensation.  The
Company  intends  for the award of  Options  under  the Plan to comply  with the
requirement  for an exception to Section 162(m) of the Code  applicable to stock
option  plans so that the amount of the  Company's  deduction  for  compensation
related to the exercise of Options would not be limited by Section 162(m) of the
Internal Revenue Code.

         Restricted Stock. Generally,  the recipient of a Restricted Stock Award
recognizes  ordinary  income,  and the Company is  entitled  to a  corresponding
deduction,  equal to the Fair  Market  Value of the stock  upon the lapse of any
transfer or forfeiture  restrictions placed on the shares (i.e., upon vesting of
the shares).  A Restricted  Stock Award  recipient  who makes an election  under
Section 83(b) of the Internal Revenue Code, however,  recognizes ordinary income
equal to the Fair Market Value of the stock at the time of grant, rather than at
the time  restrictions  lapse,  and the Company is  entitled to a  corresponding
deduction at that time. If the recipient makes a Section 83(b)  election,  there
are no further  federal income tax  consequences  to either the recipient or the
Company at the time any applicable transfer or forfeiture  restrictions lapse. A
recipient of a Restricted  Stock Award may elect to have a portion of such Award
withheld  by the  Company  in  order  to  meet  any  necessary  tax  withholding
obligations.

         Accounting  Treatment.  Common Stock  issuable  pursuant to outstanding
Options  under  the  Plan  will  be  considered   outstanding  for  purposes  of
calculating  earnings per share on a diluted  basis.  The  Financial  Accounting
Standards  Board has  announced  a change  in the  required  accounting  methods
applicable to stock options effective after June 15, 2005. Under such accounting
requirements,  the Company  will be required to recognize  compensation  expense
related to stock options outstanding based upon the fair value of such awards at
the date of grant over the period  that such awards are  earned.  As such,  upon
stockholder  approval  of the Plan,  the  Company  will  recognize  a  financial
reporting  expense related to Awards to outside directors as defined in the Plan
for the fiscal reporting period including the date of such stockholder  approval
and for subsequent periods as such Awards are vested. The Company will recognize
additional  financial reporting expense at such time that the Committee may make
Awards to officers and employees and thereafter as such Awards vest.

         For  accounting  purposes,  the  Company  will  recognize  compensation
expense for Common  Stock  subject to  Restricted  Stock Awards over the vesting
period at the Fair Market Value of the shares on the date they are awarded.

                                      -24-



         Possible  Dilutive  Effects of the Plan.  The Common Stock to be issued
upon the exercise of Options awarded under the Plan may either be authorized but
unissued shares of Common Stock or shares purchased in the open market.  Because
the  stockholders  of the Company do not have preemptive  rights,  to the extent
that the  Company  funds  the Plan,  in whole or in part,  with  authorized  but
unissued shares, the interests of current  stockholders may be diluted.  If upon
the exercise of all of the Options,  the Company delivers newly issued shares of
Common Stock (i.e.,  3,564,137 shares of Common Stock), then the dilutive effect
to current  stockholders  would be  approximately  4.67%.  The Company can avoid
dilution  resulting from awards under the Plan by delivering shares  repurchased
in the open market upon the exercise of Options.

         It is the  Company's  present  intention to fund the  Restricted  Stock
Awards  through  open-market  purchases  of Common  Stock,  which  will cause no
dilutive effect. The Plan provides, however, that Common Stock to be awarded may
be acquired by the Plan through  open-market  purchases or from  authorized  but
unissued shares of Common Stock from the Company.  To the extent that authorized
but unissued shares are utilized to fund Restricted Stock Awards,  the interests
of current  stockholders  may be diluted.  If all Restricted Stock Awards (i.e.,
1,425,655  shares of Common  Stock) are funded  with newly  issued  shares,  the
dilutive effect to current stockholders would be approximately 1.93%.

Shareholder Approval

         Shareholder approval of the Plan is being sought in accordance with the
listing standards of the Nasdaq National Market and OTS regulations.  Additional
purposes  of  requesting  shareholder  approval  of the Plan are to  permit  the
Options to qualify as Incentive  Stock Options in  accordance  with the Internal
Revenue Code and to meet the requirements for the  tax-deductibility  of certain
compensation   items  under  Section  162(m)  of  the  Internal   Revenue  Code.
Additionally,  shareholder  approval of the Plan will enable recipients of Stock
Options and Restricted Stock Awards to qualify for certain  exemptive  treatment
from  the  short-swing  profit  recapture  provisions  of  Section  16(b) of the
Exchange Act.

         In voting  on the  approval  of the Plan,  you may vote in favor of the
proposal,  against the  proposal or abstain from  voting.  To be approved,  this
matter requires the affirmative vote of the majority of the votes eligible to be
cast at the Annual Meeting,  including shares held by Kearny MHC ("Vote Standard
A"), AND by the  affirmative  vote of a majority of the votes cast at the Annual
Meeting,  excluding the shares held by Kearny MHC ("Vote  Standard B"). For Vote
Standard  A,  abstention  and broker  non-votes  will have the same  effect as a
negative vote. For Vote Standard B,  abstentions and broker  non-votes will have
no effect on the voting.

            THE OTS DOES NOT ENDORSE OR APPROVE THE PLAN IN ANY WAY.

        THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
     THE KEARNY FINANCIAL CORP. 2005 STOCK COMPENSATION AND INCENTIVE PLAN.

                                      -25-



--------------------------------------------------------------------------------
        PROPOSAL III - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
--------------------------------------------------------------------------------

         Appointment of  Independent  Auditor.  The Audit  Committee of Board of
Directors of the Company has appointed Beard Miller Company LLP as the Company's
independent  auditor for the fiscal year ending June 30, 2006. This  appointment
is being submitted to the Company's stockholders for ratification.  Beard Miller
was the Company's independent auditor for the fiscal year ended June 30, 2005. A
representative  of Beard Miller is expected to be present at the  Meeting,  will
have  the  opportunity  to  make a  statement  if he or she so  desires,  and is
expected to be available to respond to appropriate questions.

         Ratification of the appointment of the independent auditor requires the
affirmative  vote of a majority of the votes cast, in person or by proxy, by the
stockholders  of the Company at the Meeting.  The Board of Directors  recommends
that stockholders vote "FOR" the ratification of the appointment of Beard Miller
Company LLP as the Company's independent auditor for the 2006 fiscal year.

         Change in Independent  Auditor.  On April 1, 2005, the Company's former
independent  auditor,  Radics & Co.,  LLC  ("Radics"),  merged with Beard Miller
Company LLP ("Beard  Miller")  to become the Pine  Brook,  New Jersey  office of
Beard Miller.  As a result of the merger,  on April 1, 2005,  Radics resigned as
independent  auditors of the Company and the Company engaged Beard Miller as its
successor  independent audit firm. The Company's  engagement of Beard Miller was
approved  by the  Company's  Audit  Committee.  The  reports  of  Radics  on the
consolidated  financial statements of the Company as of and for the fiscal years
ended June 30, 2004 and 2003,  did not contain an adverse  opinion or disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles. During the Company's fiscal years ended June 30, 2004 and
2003, and in connection with the audit of the Company's  consolidated  financial
statements  for such  periods,  and for the period from July 1, 2004 to April 1,
2005, there were no  disagreements  between the Company and Radics on any matter
of  accounting  principles  or  practices,   consolidated   financial  statement
disclosure,  or  auditing  scope or  procedure,  which,  if not  resolved to the
satisfaction  of Radics,  would have  caused  Radics to make  reference  to such
matter  in  connection  with its audit  reports  on the  Company's  consolidated
financial statements.

         Principal  Accounting  Fees and Services.  Effective July 30, 2002, the
Securities  and  Exchange Act of 1934 was amended by the  Sarbanes-Oxley  Act of
2002 to require all auditing  services  and  non-audit  services  provided by an
issuer's  independent  auditor to be approved by the  issuer's  audit  committee
prior to such services being rendered or to be approved pursuant to pre-approval
policies  and  procedures  established  by the  issuer's  audit  committee.  The
Company's Audit  Committee  approves each service prior to the engagement of the
auditor for all audit and non-audit  services.  All of the services listed below
were approved by the Audit Committee prior to the service being rendered.  There
were no services that were not  recognized to be non-audit  services at the time
of engagement that were approved after the fact.

         Audit  Fees.  Audit  fees  consist  of fees for  professional  services
rendered for the audit of the Company's annual consolidated financial statements
and for the  review of the  quarterly  consolidated  financial  statements.  The
aggregate  audit fees  billed by Beard  Miller for the year ended June 30,  2005
were $125,000 and the  aggregate  audit fees billed by Radics for the year ended
June 30, 2004 were $102,000.

         Audit Related Fees. Audit related fees consist principally of assurance
and related services normally provided by the independent  auditor in connection
with statutory and regulatory  filings.  The aggregate audit related fees billed
by Beard Miller for the year ended June 30, 2005 were $45,500 and the  aggregate
audit  related  fees  billed by Radics  for the year  ended  June 30,  2004 were
$15,000.

                                      -26-



         Tax Fees.  The  aggregate  fees  billed by Beard  Miller and Radics for
professional  services rendered for tax compliance,  tax advice and tax planning
totaled  $28,000  and  $19,800  for the  years  ended  June 30,  2005 and  2004,
respectively.  Such tax-related services consisted of tax return preparation and
consultation.

         All Other Fees.  The  aggregate  fees billed by Beard Miller and Radics
for  professional  services  rendered for services or products  other than those
listed under the captions  "Audit  Fees,"  "Audit-Related  Fees," and "Tax Fees"
totaled  $192,500  for the year ended June 30,  2005 and  consisted  of expenses
related to the Company's minority stock offering completed in February 2005. For
the year ended June 30, 2004,  there were no fees billed other than those listed
under the captions "Audit Fees," "Audit-Related Fees," and "Tax Fees."

--------------------------------------------------------------------------------
                              STOCKHOLDER PROPOSALS
--------------------------------------------------------------------------------

         In  order  to be  considered  for  inclusion  in  the  Company's  proxy
materials for the annual meeting of stockholders for the fiscal year ending June
30, 2005, all stockholder  proposals must be received at the Company's executive
office at 120 Passaic Avenue,  Fairfield,  New Jersey, 07004 a reasonable amount
of time before the Company begins to print and mail its proxy materials for such
meeting.  Stockholder proposals must meet other applicable criteria as set forth
in the Company's bylaws in order to be considered for inclusion in the Company's
proxy materials.

         Under  the  Company's  Charter,  stockholder  proposals  that  are  not
included in the  Company's  proxy  statement for the fiscal year ending June 30,
2005,  will only be considered  at the annual  meeting to be held in 2006 if the
stockholder submits notice of the proposal to the Company at the above address a
reasonable  amount of time before the Company begins to print and mail its proxy
materials for such meeting.  Stockholder  proposals  must meet other  applicable
criteria as set forth in the  Company's  bylaws in order to be considered at the
2006 annual meeting.

--------------------------------------------------------------------------------
                                  OTHER MATTERS
--------------------------------------------------------------------------------

         The Board of Directors is not aware of any other matters to come before
the Meeting.  However,  if any other  matters  should  properly  come before the
Meeting or any  adjournments,  it is intended  that proxies in the  accompanying
form will be voted in respect  thereof in  accordance  with the  judgment of the
persons named in the accompanying proxy.

--------------------------------------------------------------------------------
                                  MISCELLANEOUS
--------------------------------------------------------------------------------

         The  cost of  soliciting  proxies  will be borne  by the  Company.  The
Company  will  reimburse  brokerage  firms and other  custodians,  nominees  and
fiduciaries for reasonable  expenses incurred by them in sending proxy materials
to the beneficial  owners of the Common Stock. In addition to  solicitations  by
mail,  directors,  officers,  and regular  employees  of the Company may solicit
proxies personally or by telephone without additional compensation.  The Company
has  engaged  D.F.  King to act as a proxy  solicitor  in  connection  with  the
Meeting; and the cost of this engagement is $5,000, plus expenses.

                                      -27-


                                                                      APPENDIX A

                             Kearny Financial Corp.
                           Kearny Federal Savings Bank
             Audit & Compliance Committee Charter & Policy Statement

Purpose

The Audit &  Compliance  Committee  ("Committee")  is  appointed by the Board of
Directors  of Kearny  Financial  Corp.  (the  "Company")  and  serves as a joint
committee of the Boards of  Directors  of both the Company and its  wholly-owned
subsidiary,   Kearny  Federal  Savings  Bank  (the  "Bank").  The  Committee  is
responsible for overseeing the accounting and financial  reporting  processes of
the  Company,   the  Bank,  their  subsidiaries  and  Kearny  MHC  (referred  to
hereinafter  collectively  as "Kearny").  The Committee is also  responsible for
overseeing audits of Kearny's financial statements.

The Committee's primary duties and responsibilities are to:

o    Monitor the integrity of Kearny's  systems of internal  controls  regarding
     finance,  accounting, and compliance;  including the review and approval of
     10K/10Q SEC filings.

o    Monitor the  independence  and  performance of the external audit firm, the
     Internal Audit Department and the Compliance Department.

o    Monitor compliance with legal and regulatory requirements.

o    Monitor and manage the Whistleblower Program.

o    Provide  an  avenue  of  communication   among  the  external  audit  firm,
     management,  the Internal Audit Department,  the Compliance  Department and
     the Board of Directors.

The  Committee  has the authority to conduct any  investigation  appropriate  to
fulfilling its responsibilities,  and it has direct access to the external audit
firm as well as anyone in the Kearny organization. The Committee has the ability
to  retain,  at the  Company's  expense,  special  legal,  accounting,  or other
consultants or experts it deems necessary in the performance of its duties.  The
Committee has the authority to determine  appropriate  funding, at the Company's
expense, for payment of ordinary  administrative  expenses of the Committee that
are  determined by the Committee to be necessary or  appropriate in carrying out
the duties of the Committee.

This charter will be recorded in the Company's and the Bank's minutes, available
in written form upon request.

Audit Committee Composition and Meetings

The Committee  shall be comprised of three or more directors as appointed by the
Board of Directors,  each of whom shall be non-executive directors and shall not
accept any consulting,  advisory or other compensatory fees, other than director
fees, from Kearny. Additionally, the committee shall be comprised of individuals
who are not  officers or  employees  of any of Kearny's  affiliates  and who are
independent,  as defined by the rules of NASDAQ.  All  members of the  Committee
shall have an understanding of financial  statements.  At least one member shall
have past employment experience in finance or accounting,  required professional
certification in accounting,  or any other  comparable  experience or background
which results in the individual's  financial  sophistication,  including but not
limited  to being or having  been a chief  executive  officer,  chief  financial
officer or other senior officer with financial oversight responsibilities.

                                       A-1



At least one member of the Committee  shall be a financial  expert as defined by
the Securities and Exchange Commission.  The Committee Chair shall be elected by
the Committee.

The duties and  responsibilities of a member of the Committee are in addition to
those duties set out for a member of the Board of Directors.

The Committee shall meet at least monthly,  or more frequently as  circumstances
dictate, or as determined by the Board of Directors, the Committee Chair, or the
Chief Executive  Officer.  Minutes of meetings will be approved by the Committee
and maintained.

Responsibilities

The  Committee  shall  review and reassess the adequacy of this Charter at least
annually.

The Committee shall have responsibilities in four areas:

     1.   Audited Financial Statements;
     2.   External   Audit  Firms  (as   pertinent  to  the  Audit   Committee's
          responsibilities);
     3.   Internal Audit Department; and
     4.   Compliance Department, including Whistleblower procedures.

     Audited Financial Statements

     o    Review the fiscal year-end audited financial statements;
     o    Recommend  to the Board of Directors  for its  approval the  financial
          statements  which the Committee has reviewed and found to be accurate,
          timely, and containing all appropriate disclosures; and
     o    Obtain satisfactory  response from management concerning issues raised
          by  regulators,  the  external  audit  firm,  or  the  Internal  Audit
          Department as they relate to financial reporting.

     External Audit Firms

     o    Be  responsible  for the  appointment,  compensation  and oversight of
          external  audit  firms;  
     o    Determine  appropriate  funding  to pay for  audit,  review  or attest
          services performed by external audit firms;
     o    Approve the audit plan of external audit firms;
     o    Approve all non-audit services,  including tax services,  prior to the
          engaging  the  external  audit  firm to  perform  such  services.  The
          Committee may delegate this responsibility to an individual  Committee
          member or group of Committee members.  Non-audit services performed by
          any party other than the  external  audit firm need not be approved by
          the Committee pursuant to this section; and
     o    Review and discuss  with the  external  audit firms on an annual basis
          all  significant  relationships  they have  with the Bank  that  could
          impair the  external  audit firm's  independence  and receive from the
          external audit firm a written statement  delineating all relationships
          between the external audit firm and Kearny.

                                       A-2



     Internal Audit Department

     o    Approve the annual audit plan, any subsequent changes, and ensure that
          the  scope  of the  audit  activities  have  not  been  restricted  by
          management;
     o    Approve the  appointment,  performance,  and  replacement of the audit
          outsource provider, if applicable;
     o    Review significant audit findings,  recommendations,  and management's
          corresponding  responses and the  implementation  plan of  significant
          audit recommendations; and
     o    Direct the  Internal  Audit  Department  to perform  special  studies,
          examinations and/or reviews.

     Compliance Department

     o    Approve the Regulatory Compliance Program annually;
     o    Review  legal and  regulatory  matters  within the scope of any review
          that may have a material  effect on Kearny,  compliance  with Kearny's
          policies and procedures, and reports received by regulators;
     o    Discuss significant review findings, recommendations, and management's
          corresponding  responses and the  implementation  plan of  significant
          audit recommendations; and
     o    Establish and maintain  procedures for (i) the receipt,  retention and
          treatment of complaints received by the Company regarding  accounting,
          internal   accounting  controls  or  auditing  matters  and  (ii)  the
          confidential,  anonymous submission by employees of concerns regarding
          questionable accounting or auditing matters.

Internal Controls

The Committee will review Kearny's internal control system and the resolution of
identified material weaknesses and reportable conditions in the internal control
system,  including  the  prevention  or  detection  of  management  overrides or
compromise of the internal control system.

Publication of Charter

Pursuant to the rules of the  Securities  and  Exchange  Commission  promulgated
under the  Securities  Exchange Act of 1934, as amended,  a copy of this charter
shall be included as an appendix to the Company's annual meeting proxy statement
at least once every three fiscal years.

                                       A-3



                                                                      APPENDIX B

                             KEARNY FINANCIAL CORP.
                          NOMINATING COMMITTEE CHARTER

Purpose:

         Acting  pursuant  to  Section  10 of Article IV of the Bylaws of Kearny
Financial  Corp.  (the  "Company"),  the Board of Directors  has  established  a
Nominating  Committee  whose  purpose  is to seek  and  recommend  to the  Board
qualified  nominees  for  election  or  appointment  to the  Company's  Board of
Directors.

Membership:

         The Committee  will consist of a minimum of two members of the Board of
Directors,  all of whom  shall be  independent  directors.  Applicable  laws and
regulations,  including the regulations of the Nasdaq Stock Market,  as they may
be amended  from time to time,  will be  followed  in  evaluating  a  director's
independence. The members of the Committee will be appointed by and serve at the
discretion of the Board of Directors.

Nomination/Appointment Policy:

         The  Committee  believes that it is in the best interest of the Company
and its shareholders to obtain  highly-qualified  persons to serve as members of
the  Board of  Directors.  The  Committee  will  seek  nominees  with  excellent
decision-making ability, business experience,  personal integrity and reputation
who are  knowledgeable  about the business  activities and market areas in which
the Company and its subsidiaries engage.

          The  Committee's  process for  identifying  and  evaluating  potential
nominees will include soliciting  recommendations from directors and officers of
the  Company and its  wholly-owned  subsidiary,  Kearny  Federal  Savings  Bank.
Additionally, the Committee will consider persons recommended by shareholders of
the Company in selecting the individuals  the Committee  recommends to the Board
for  selection as the Board's  nominees.  The Committee  will  evaluate  persons
recommended  by directors or officers of the Company or Kearny  Federal  Savings
Bank and persons recommended by shareholders in the same manner.

         To be  considered  in the  Committee's  selection  of  individuals  the
Committee  recommends  to the  Board  for  selection  as the  Board's  nominees,
recommendations  from shareholders must be received by the Company in writing by
at least 120 days prior to the date the proxy  statement for the previous year's
annual meeting was first  distributed to  shareholders.  Recommendations  should
identify the submitting  shareholder,  the person  recommended for consideration
and the reasons  the  submitting  shareholder  believes  such  person  should be
considered.

Responsibilities:

         The responsibilities of the Nominating Committee shall include, but not
be limited to:

     o    Assist to identify, interview and recruit individuals for selection as
          Board nominees for election as directors.

                                       B-1



     o    Annually  present to the Board a list of individuals  recommended  for
          selection  by the Board as the Board's  nominees  for  election at the
          annual meeting of shareholders.

     o    Regularly review and make recommendations about changes to the charter
          of the Nominating Committee.

     o    Any  other  duties  or  responsibilities  expressly  delegated  to the
          Committee by the Board from time to time.

Meetings and Reports:

         The  Committee  will meet at least once annually to evaluate and make a
recommendation to the Board of individuals for selection as the Board's nominees
for  election at the annual  meeting of  shareholders.  Additional  meetings may
occur as the Committee or its chair deems  advisable.  The committee  shall keep
regular  minutes of the  transactions of its meetings and shall cause them to be
recorded in books kept for that purpose in the office of the Company.

Nomination Procedures:

         Except in the case of a nominee substituted as a result of the death or
other  incapacity  of a Board  nominee,  the  Committee  shall  deliver  written
nominations  to the  Secretary of the Company at least 20 days prior to the date
of the Company's annual meeting of shareholders. Upon delivery to the Secretary,
the  Secretary  shall  post  such  nominations  in a  conspicuous  place  in the
principal place of business of the Company.

         No nominations  for directors  except those made by the Committee shall
be voted upon at the  Company's  annual  meeting of  shareholders  unless  other
nominations by  shareholders  are made in writing and delivered to the Secretary
of the  Company  at least  five  days  prior to the date of such  meeting.  Upon
delivery  to the  Secretary,  the  Secretary  shall post such  nominations  in a
conspicuous place in the principal place of business of the Company.

         Ballots bearing the names of all persons nominated by the Committee and
by  shareholders  shall be provided for use at the Company's  annual  meeting of
shareholders.  However, if the Committee shall fail or refuse to act at least 20
days prior to the Company's  annual  meeting of  shareholders,  nominations  for
directors may be made at the annual meeting by any shareholder  entitled to vote
and shall be voted upon.

Resources and Authority:

         The Committee  shall have the resources  and authority  appropriate  to
discharge  its duties and  responsibilities,  including the authority to select,
retain,  terminate  and  approve the fees and other  retention  terms of special
counsel  and other  experts  or  consultants  as it deems  appropriate,  without
seeking  approval of the Board or  management.  With respect to  consultants  or
search firms used to identify director nominees,  this authority shall be vested
solely in the Committee.

Publication of Charter:

Pursuant to the rules of the  Securities  and  Exchange  Commission  promulgated
under the  Securities  Exchange Act of 1934, as amended,  a copy of this charter
shall be included as an appendix to the Company's annual meeting proxy statement
at least once every three fiscal years.

                                       B-2



                                                                      APPENDIX C

                             KEARNY FINANCIAL CORP.
                   2005 STOCK COMPENSATION AND INCENTIVE PLAN

 1.      PURPOSE OF PLAN.

The purpose of this 2005 Stock  Compensation  and  Incentive  Plan is to provide
incentives and rewards to officers,  employees and directors that  contribute to
the success and growth of Kearny  Financial  Corp.  and its  Affiliates,  and to
assist all these entities in attracting and retaining directors,  executives and
other key employees with experience and ability.

2.       DEFINITIONS.

"Affiliate"  means any "parent  corporation" or "subsidiary  corporation" of the
Company, as such terms are defined in Sections 424(e) and 424(f) of the Code.

"Award"  means  Restricted  Stock Awards and/or Stock  Options,  as set forth in
Section 6 of the Plan.

"Bank" means Kearny Federal Savings Bank, and any successors thereto.

"Beneficiary"  means the  person or persons  designated  by the  Participant  to
receive any benefits  payable under the Plan in the event of such  Participant's
death.  Such person or persons shall be designated in writing by the Participant
and addressed to the Company or the Committee on forms provided for this purpose
by  the  Committee,  and  delivered  to  the  Company  or  the  Committee.  Such
Beneficiary  designation  may be changed  from time to time by  similar  written
notice to the Committee.  A Participant's last will and testament or any codicil
thereto  shall not  constitute  written  designation  of a  Beneficiary.  In the
absence of such written designation,  the Beneficiary shall be the Participant's
surviving spouse, if any, or if none, the Participant's estate.

"Board of Directors" means the board of directors of the Company.

"Cause" means the personal dishonesty,  incompetence, willful misconduct, breach
of fiduciary duty involving  personal  profits,  intentional  failure to perform
stated  duties,  willful  violation of a material  provision of any law, rule or
regulation (other than traffic  violations and similar  offense),  or a material
violation of a final cease-and-desist order or any other action which results in
a substantial financial loss to the Company or its Affiliates.

"Change in Control" shall mean: (i) the sale of all, or a material  portion,  of
the assets of the Company or its Affiliates; (ii) the merger or recapitalization
of the Company whereby the Company is not the surviving  entity;  (iii) a change
in control of the Company,  as otherwise  defined or determined by the Office of
Thrift  Supervision or regulations  promulgated by it; or (iv) the  acquisition,
directly or indirectly,  of the beneficial ownership (within the meaning of that
term as it is used in Section 13(d) of the  Securities  Exchange Act of 1934 and
the rules and regulations  promulgated  thereunder) of twenty-five percent (25%)
or more of the  outstanding  voting  securities  of the  Company by any  person,
trust,  entity or group.  This  limitation  shall not apply to the  purchase  of
shares by underwriters in connection with a public offering of Company stock, or
the purchase of shares of up to 25% of any class of securities of the Company by
a  tax-qualified  employee  stock benefit plan which is exempt from the approval
requirements,  set forth  under 12  C.F.R.  Section  574.3(c)(1)(vii)  as now in
effect or as may hereafter be amended. The term "person" refers

                                       C-1



to an  individual  or a  corporation,  partnership,  trust,  association,  joint
venture, pool, syndicate,  sole proprietorship,  unincorporated  organization or
any other form of entity not  specifically  listed  herein.  A Change in Control
shall not include a transaction  whereby the MHC shall merge into the Company or
the Bank and a new Parent of the Company or the Bank is formed.

"Code" means the Internal Revenue Code of 1986, as amended.

"Committee"  means the Board of Directors  of the Company or the  administrative
committee designated, pursuant to Section 3 of the Plan, to administer the Plan.

"Common Stock" means the common stock of the Company.

"Company" means Kearny  Financial  Corp., and any successor entity or any future
parent corporation of the Bank.

"Director"  means a person  serving as a member of the Board of Directors of the
Company from time to time.

"Director  Emeritus"  means a person  serving as a director  emeritus,  advisory
director,  consulting  director or other similar position as may be appointed by
the Board of Directors of the Company from time to time.

"Disability"  means (a) with respect to Incentive Stock Options,  the "permanent
and total  disability"  of the  Employee  as such  term is  defined  at  Section
22(e)(3) of the Code;  and (b) with  respect to other  Awards,  any  physical or
mental  impairment which renders the Participant  incapable of continuing in the
employment  or  service  of the  Company  or its  Affiliates  in his or her then
current capacity as determined by the Committee.

"Effective Date" shall mean the date of stockholder  approval of the Plan by the
stockholders of the Company.

"Eligible  Participant" means an Employee or Outside Director who may receive an
Award under the Plan.

"Employee"  means any person employed by the Company or an Affiliate.  Directors
who are also  employed  by the  Company  or an  Affiliate  shall  be  considered
Employees under the Plan.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Exercise  Price" means the price at which an individual may purchase a share of
Common Stock pursuant to an Option.

"Fair  Market  Value"  means the  closing  sales  price  reported  on the Nasdaq
National Market (as published by The Wall Street Journal,  if published) on such
date or, if the Common  Stock was not traded on such  date,  on the  immediately
preceding day on which the Common Stock was traded  thereon or the last previous
date on which a sale is reported.

"Incentive  Stock Option" means a Stock Option  granted under the Plan,  that is
intended to meet the requirements of Section 422 of the Code.

"MHC" means Kearny MHC, the mutual holding company of the Bank.

                                       C-2



"Non-Statutory Stock Option" means a Stock Option granted to an individual under
the Plan that is not intended to be and is not identified as an Incentive  Stock
Option,  or an  Option  granted  under the Plan  that is  intended  to be and is
identified as an Incentive Stock Option, but that does not meet the requirements
of Section 422 of the Code.

"Option" or "Stock  Option" means an Incentive  Stock Option or a  Non-Statutory
Stock Option, as applicable.

"Outside  Director"  means a member of the Board of Directors of the Company who
is not also an Employee.

"Parent"  means any  present  or  future  corporation  which  would be a "parent
corporation" of the Bank or the Company as defined in Sections 424(e) and (g) of
the Code.

"Participant"  means an individual who is granted an Award pursuant to the terms
of the Plan.

"Plan" means this Kearny  Financial Corp. 2005 Stock  Compensation and Incentive
Plan.

"Restricted Stock Award" means an Award of shares of restricted stock granted to
a Participant pursuant to Section 6(b) of the Plan.

"Trust" shall mean any grantor trust  established by the Company for purposes of
administration of the Plan.

"Trustee" or "Trustee Committee" means that person(s) or entity appointed by the
Committee  to hold  legal  title to the Plan  assets  under  any  Trust  for the
purposes set forth herein.

3.   ADMINISTRATION.

     (a)  The Committee  shall  administer the Plan. The Committee shall consist
          of two or more  disinterested  directors of the Company,  who shall be
          appointed  by the  Board  of  Directors.  A  member  of the  Board  of
          Directors  shall  be  deemed  to be  disinterested  only  if he or she
          satisfies:  (i)  such  requirements  as the  Securities  and  Exchange
          Commission  may establish  for  non-employee  directors  administering
          plans  intended  to  qualify  for  exemption  under Rule 16b-3 (or its
          successor)  of the  Exchange  Act and  (ii) and to the  extent  deemed
          appropriate  by the  Board  of  Directors,  such  requirements  as the
          Internal  Revenue Service may establish for outside  directors  acting
          under  plans   intended  to  qualify  for   exemption   under  Section
          162(m)(4)(C) of the Code; provided,  however, a failure to comply with
          the  requirements of this  subparagraph  (ii) shall not disqualify any
          actions  taken by the  Committee.  A majority of the entire  Committee
          shall  constitute a quorum and the action of a majority of the members
          present at any  meeting  at which a quorum is present  shall be deemed
          the  action of the  Committee.  In no event may the  Committee  revoke
          outstanding  Awards  without  the  consent  of  the  Participant.  All
          decisions,  determinations and  interpretations of the Committee shall
          be final and conclusive on all persons affected thereby.

          (b)  Subject to paragraph (a) of this Section 3, the Committee shall:

               (i)  select the  individuals  who are to receive grants of Awards
                    under the Plan;

                                       C-3



               (ii) determine the type, number,  vesting  requirements and other
                    features and conditions of Awards made under the Plan;
               (iii)interpret the Plan and Award  Agreements (as defined below);
                    and 
               (iv) make all other  decisions  related to the  operation  of the
                    Plan.

          (c)  Each Award granted under the Plan shall be evidenced by a written
               agreement  (i.e.,  an "Award  Agreement").  Each Award  Agreement
               shall  constitute  a binding  contract  between the Company or an
               Affiliate  and  the  Participant,  and  every  Participant,  upon
               acceptance of an Award Agreement, shall be bound by the terms and
               restrictions  of the Plan and the Award  Agreement.  The terms of
               each Award  Agreement  shall be set in accordance  with the Plan,
               but  each  Award   Agreement  may  also  include  any  additional
               provisions  and  restrictions  determined  by the  Committee.  In
               particular,  and at a minimum,  the Committee  shall set forth in
               each Award Agreement:

               (i)  the type of Award  granted;  
               (ii) the  Exercise  Price for any  Option;  
               (iii)the number of shares or rights  subject  to the Award;  
               (iv) the expiration date of the Award;
               (v)  the  manner,  time and rate  (cumulative  or  otherwise)  of
                    exercise or vesting of the Award; and
               (vi) the  restrictions,  if any,  placed  on the  Award,  or upon
                    shares  which may be issued upon the  exercise or vesting of
                    the Award.

         The Chairman of the  Committee  and/or the President of the Company are
         hereby  authorized to execute Award Agreements on behalf of the Company
         or an Affiliate  and to cause them to be delivered to the  Participants
         granted Awards under the Plan.

          (d)  Six Month Holding  Period.  Subject to vesting  requirements,  if
               applicable,  except  in the event of death or  Disability  of the
               Participant  or a Change in Control of the Company,  a minimum of
               six months must elapse between the date of the grant of an Option
               and the date of the sale of the Common Stock received through the
               exercise of such Option.

4.   ELIGIBILITY.

Subject  to the terms of the  Plan,  Employees  and  Outside  Directors,  as the
Committee shall determine from time to time, shall be eligible to receive Awards
in accordance with the Plan.

                                       C-4



5.   SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS.

5.1 Shares  Available.  Subject to the provisions of Section 7, the Common Stock
that  may be  delivered  under  this  Plan  shall  be  shares  of the  Company's
authorized but unissued  Common Stock,  shares of Common Stock  purchased in the
open-market   by  the  Company  or  any  Trust   established   for  purposes  of
administration  of the Plan and any  shares of  Common  Stock  held as  treasury
shares.

5.2 Share  Limits.  The  maximum  number of shares of Common  Stock  that may be
delivered  pursuant to Awards granted under this Plan (the "Share Limit") equals
4,989,792 shares. The following limits also apply with respect to Awards granted
under this Plan:

         (a)      The  maximum  number of shares  of  Common  Stock  that may be
                  delivered  pursuant to the exercise of Stock  Options  granted
                  under this Plan is 3,564,137 shares.

         (b)      The  maximum  number of shares  of  Common  Stock  that may be
                  delivered  pursuant to Restricted  Stock Awards  granted under
                  this Plan is 1,425,655 shares.

5.3 Awards Settled in Cash,  Reissue of Awards and Shares. To the extent that an
Award is settled in cash or a form other than shares of Common Stock, the shares
that would have been  delivered had there been no such cash or other  settlement
shall be counted  against the shares  available  for  issuance  under this Plan.
Shares that are subject to or underlie Awards which expire or for any reason are
cancelled or terminated,  are  forfeited,  fail to vest, or for any other reason
are not  paid or  delivered  under  this  Plan  shall  again  be  available  for
subsequent Awards under this Plan.

5.4  Reservation of Shares;  No Fractional  Shares;  Minimum Issue.  The Company
shall at all times  reserve a number of  shares of Common  Stock  sufficient  to
cover the Company's  obligations  and  contingent  obligations to deliver shares
with respect to Awards then  outstanding  under this Plan. No fractional  shares
shall be delivered  under this Plan.  The  Committee may pay cash in lieu of any
fractional  shares in  settlements  of Awards under this Plan. No fewer than 100
shares may be purchased on exercise of any Stock Option  unless the total number
purchased or exercised is the total number at the time available for purchase or
exercise by the Participant.

6.   AWARDS.

6.1 Except as otherwise  detailed herein, the Committee shall determine the type
or  types  of  Award(s)  to be made  to each  Eligible  Participant  or  Outside
Director.  Awards may be granted singularly, in combination or in tandem. Awards
also may be made in  combination  or in  tandem  with,  in  replacement  of,  as
alternatives  to, or as the  payment  form for grants or rights  under any other
employee or  compensation  plan of the Company.  The types of Awards that may be
granted  under this Plan are Stock  Options  and  Restricted  Stock  Awards,  as
follows:

          (a) STOCK OPTIONS.

                  The Committee may, subject to the limitations of this Plan and
                  the  availability  of shares of Common Stock  reserved but not
                  previously  awarded  under the Plan,  grant  Stock  Options to
                  Employees  and  Outside   Directors,   subject  to  terms  and
                  conditions as it may determine,  to the extent that such terms
                  and conditions are consistent with the following provisions:

                                       C-5



               (i)  EXERCISE  PRICE.  The Exercise  Price of Stock Options shall
                    not be less  than one  hundred  percent  (100%)  of the Fair
                    Market Value of the Common Stock on the date of grant.

               (ii) TERMS OF OPTIONS.  In no event may an individual exercise an
                    Option,  in whole or in part,  more than ten (10) years from
                    the date of grant.

               (iii)NON-TRANSFERABILITY.  Unless  otherwise  determined  by  the
                    Committee,   an  individual   may  not   transfer,   assign,
                    hypothecate,  or dispose of an Option in any  manner,  other
                    than by  will  or the  laws  of  intestate  succession.  The
                    Committee may, however,  in its sole discretion,  permit the
                    transfer or assignment of a Non- Statutory Stock Option,  if
                    it  determines  that the transfer or assignment is for valid
                    estate planning purposes and is permitted under the Code and
                    Rule 16b-3 of the Exchange Act. For purposes of this Section
                    6.1(a),  a  transfer  for  valid  estate  planning  purposes
                    includes, but is not limited to, transfers:

                    (1)  to a  revocable  INTER  VIVOS  trust,  as to  which  an
                         individual is both settlor and trustee;

                    (2)  for  no  consideration   to:  (a)  any  member  of  the
                         individual's  Immediate Family;  (b) a trust solely for
                         the  benefit of members of the  individual's  Immediate
                         Family;  (c) any  partnership  whose only  partners are
                         members of the individual's  Immediate  Family;  or (d)
                         any limited  liability  corporation or other  corporate
                         entity whose only members or equity  owners are members
                         of the individual's Immediate Family.

                         For purposes of this Section  6.1,   "Immediate Family"
                         includes,   but  is  not  necessarily  limited   to,  a
                         Participant's parents, grandparents, spouse,  children,
                         grandchildren,   siblings   (including   half  brothers
                         and sisters),  and individuals  who are family  members
                         by  adoption.  Nothing  contained  in  this Section 6.1
                         shall be  construed  to require  the  Committee to give
                         its approval to  any  transfer  or   assignment  of any
                         Non-Statutory  Stock  Option  or  portion thereof,  and
                         approval   to   transfer  or assign  any  Non-Statutory
                         Stock  Option  or  portion  thereof  does not mean that
                         such approval will be given with respect  to any  other
                         Non-Statutory   Stock   Option   or  portion   thereof.
                         The  transferee  or assignee of any Non-Statutory Stock
                         Option  shall  be  subject  to  all  of  the  terms and
                         conditions  applicable  to  such Non-  Statutory  Stock
                         Option immediately  prior to the transfer or assignment
                         and   shall   be   subject   to   any other  conditions
                         prescribed by the Committee   with   respect   to  such
                         Non-Statutory Stock Option.

                    (iv) SPECIAL    RULES   FOR   INCENTIVE    STOCK    OPTIONS.
                         Notwithstanding the foregoing provisions, the following
                         rules shall further apply to grants of Incentive  Stock
                         Options:

                         (1)  If an  Employee  owns  or is  treated  as  owning,
                              for purposes of Section  422 of the  Code,  Common
                              Stock  representing more than ten percent (10%) of
                              the  total  combined   voting   securities  of the
                              Company  at  the  time  the  Committee  grants the
                              Incentive Stock Option (a "10% Owner"), the

                                       C-6



                                    Exercise  Price  shall  not be less than one
                                    hundred and ten  percent  (110%) of the Fair
                                    Market Value of the Common Stock on the date
                                    of grant.

                           (2)      An Incentive  Stock Option  granted to a 10%
                                    Owner  shall  not be  exercisable  more than
                                    five (5) years from the date of grant.

                           (3)      To the  extent  the  aggregate  Fair  Market
                                    Value of shares of Common Stock with respect
                                    to  which   Incentive   Stock   Options  are
                                    exercisable   for  the  first   time  by  an
                                    Employee during any calendar year, under the
                                    Plan or any other  stock  option plan of the
                                    Company,  exceeds  $100,000,  or such higher
                                    value as may be permitted  under Section 422
                                    of the  Code,  Incentive  Stock  Options  in
                                    excess  of  the  $100,000   limit  shall  be
                                    treated as Non-Statutory Stock Options. Fair
                                    Market Value shall be  determined  as of the
                                    date  of  grant  for  each  Incentive  Stock
                                    Option.

                           (4)      Each Award  Agreement for an Incentive Stock
                                    Option  shall  require  the   individual  to
                                    notify the Committee within ten (10) days of
                                    any  disposition  of shares of Common  Stock
                                    under the circumstances described in Section
                                    421(b)  of the  Code  (relating  to  certain
                                    disqualifying dispositions).

                           (5)      Incentive  Stock Options may only be awarded
                                    to  an   Employee  of  the  Company  or  its
                                    Affiliates.

                    (v)  OPTION  AWARDS TO  OUTSIDE  DIRECTORS.  Subject  to the
                         limitations  of  Section  6.4(a),  Non-Statutory  Stock
                         Options to purchase 133,655 shares of Common Stock will
                         be granted to each  Outside  Director of the Company as
                         of the Effective  Date,  at an Exercise  Price equal to
                         the Fair Market  Value of the Common Stock on such date
                         of grant. The Options will be first  exercisable at the
                         rate  of  20%  on  the  one  year  anniversary  of  the
                         Effective Date and 20% annually  thereafter during such
                         periods of service as a Director or Director  Emeritus.
                         Upon  the  death  or  Disability  of  the  Director  or
                         Director   Emeritus,   such  Option   shall  be  deemed
                         immediately  100%   exercisable.   Such  Options  shall
                         continue  to be  exercisable  for a period of ten years
                         following  the  date of  grant  without  regard  to the
                         continued  services  of such  Director as a Director or
                         Director  Emeritus.  In the  event  of  the  Director's
                         death, such Options may be exercised by the Beneficiary
                         or the personal  representative of his estate or person
                         or persons to whom his rights  under such Option  shall
                         have  passed  by will or by the  laws  of  descent  and
                         distribution. Options may be granted to newly appointed
                         or elected Outside Directors within the sole discretion
                         of the Committee.  The Exercise Price per share of such
                         Options granted shall be equal to the Fair Market Value
                         of the  Common  Stock  at the  time  such  Options  are
                         granted.    All   outstanding   Awards   shall   become
                         immediately  exercisable  in the  event of a Change  in
                         Control of the Bank or the  Company.  Unless  otherwise
                         inapplicable,  or  inconsistent  with the provisions of
                         this  paragraph,  the  Options to be granted to Outside
                         Directors  hereunder  shall  be  subject  to all  other
                         provisions of this Plan.

         (b) RESTRICTED STOCK AWARDS.

                  The  Committee  may make grants of  Restricted  Stock  Awards,
                  which  shall  consist of the grant of some number of shares of
                  Common Stock to an individual upon such terms and

                                       C-7



                  conditions as it may  determine,  to the extent such terms and
                  conditions are consistent with the following provisions:

                  (i)      GRANTS OF STOCK.  Restricted Stock Awards may only be
                           granted in whole shares of Common Stock.

                  (ii)     NON-TRANSFERABILITY.  Except to the extent  permitted
                           by the Code,  the  rules  promulgated  under  Section
                           16(b) of the Exchange Act or any  successor  statutes
                           or rules:

                           (1)      The  recipient of a  Restricted  Stock Award
                                    grant  shall  not  sell,  transfer,  assign,
                                    pledge, or otherwise encumber shares subject
                                    to the  grant  until  full  vesting  of such
                                    shares has  occurred.  For  purposes of this
                                    Section 6.1, the  separation  of  beneficial
                                    ownership and legal title through the use of
                                    any  "swap"  transaction  is  deemed to be a
                                    prohibited encumbrance.

                           (2)      Unless    otherwise    determined   by   the
                                    Committee,  and  except  in the event of the
                                    Participant's   death  or   pursuant   to  a
                                    qualified   domestic   relations   order,  a
                                    Restricted   Stock   Award   grant   is  not
                                    transferable  and may be earned  only by the
                                    individual to whom it is granted  during his
                                    or  her  lifetime.   Upon  the  death  of  a
                                    Participant,  a Restricted Stock Award shall
                                    be  transferred  to  the  Beneficiary.   The
                                    designation  of  a  Beneficiary   shall  not
                                    constitute a transfer.

                           (3)      If the recipient of a Restricted Stock Award
                                    is subject to the  provisions  of Section 16
                                    of the Exchange Act,  shares of Common Stock
                                    subject  to the grant may not,  without  the
                                    written  consent  of  the  Committee  (which
                                    consent   may  be   given   in   the   Award
                                    Agreement), be sold or otherwise disposed of
                                    within six (6) months  following the date of
                                    grant.

                  (iii)    ISSUANCE OF CERTIFICATES. The Committee, in its  sole
                           discretion, may  permit  the  issuance  of  shares of
                           Common  Stock  to  be issued pursuant to a Restricted
                           Stock  Award  prior to the time that such Award shall
                           be deemed earned and non-forfeitable, with such stock
                           certificate evidencing such shares registered  in the
                           name of the Participant to whom the Restricted  Stock
                           Award  was   granted;  provided,  however,  that  the
                           Company  may  not  cause  a  stock  certificate to be
                           issued  unless  it  has  received  a stock power duly
                           endorsed  in  blank  with  respect  to  such  shares.
                           Further,  each  such stock certificate shall bear the
                           following legend:

                                    THE  TRANSFERABILITY OF THIS CERTIFICATE AND
                                    THE SHARES OF STOCK  REPRESENTED  HEREBY ARE
                                    SUBJECT  TO  THE  RESTRICTIONS,   TERMS  AND
                                    CONDITIONS  (INCLUDING FORFEITURE PROVISIONS
                                    AND RESTRICTIONS AGAINST TRANSFER) CONTAINED
                                    IN THE  KEARNY  FINANCIAL  CORP.  2005 STOCK
                                    COMPENSATION  AND  INCENTIVE  PLAN  AND  THE
                                    RELATED AWARD AGREEMENT ENTERED INTO BETWEEN
                                    THE REGISTERED OWNER OF SUCH SHARES

                                       C-8



                                  AND KEARNY FINANCIAL CORP. OR ITS  AFFILIATES.
                                  A  COPY  OF THE PLAN AND AWARD AGREEMENT IS ON
                                  FILE IN THE OFFICE OF THE CORPORATE  SECRETARY
                                  OF KEARNY FINANCIAL CORP.

                           This legend shall not be removed until the individual
                           becomes  vested  in  such   Restricted   Stock  Award
                           pursuant   to  the   terms  of  the  Plan  and  Award
                           Agreement.  Each certificate  issued pursuant to this
                           Section  6.1(b)  shall be held by the  Company or its
                           Affiliates,    unless   the   Committee    determines
                           otherwise.

                  (iv)     TREATMENT OF DIVIDENDS.  Participants are entitled to
                           all  dividends and other  distributions  declared and
                           paid on all  shares  of  Common  Stock  subject  to a
                           Restricted  Stock  Award,  from and after the date of
                           grant of such Restricted Stock Award;  provided that,
                           such dividends and other  distributions shall be held
                           in arrears by the Plan or Trust, if applicable, until
                           the underlying Restricted Stock Award shall be deemed
                           earned and non-forfeitable.

                  (v)      VOTING RIGHTS  ASSOCIATED  WITH OF  RESTRICTED  STOCK
                           AWARDS.
                           Voting rights  associated  with any Restricted  Stock
                           Award shall not be exercised by the Participant until
                           certificates of Common Stock  representing such Award
                           have been issued to such  Participant.  Any shares of
                           Common Stock held by the Trust prior to issuance to a
                           Participant  shall be voted  by the  Trustee  of such
                           Trust as directed by the Committee.

                  (vi)     RESTRICTED STOCK AWARDS TO OUTSIDE DIRECTORS.
                           Notwithstanding anything herein to the contrary, upon
                           the   Effective   Date,  a  Restricted   Stock  Award
                           consisting  of 53,462 shares of Common Stock shall be
                           awarded to each Outside Director of the Company. Such
                           Award shall be earned and non-forfeitable at the rate
                           of one-fifth as of the  one-year  anniversary  of the
                           Effective Date and an additional  one-fifth following
                           each of the next four  successive  years.  Such Award
                           shall be immediately 100% earned and non- forfeitable
                           in the  event  of the  death  or  Disability  of such
                           Director. Such Award shall be immediately 100% earned
                           and  non-forfeitable  upon a Change in Control of the
                           Company  or the  Bank.  Subsequent  to the  Effective
                           Date, Restricted Stock Awards may be granted to newly
                           elected or  appointed  Outside  Directors  within the
                           discretion  of the  Committee,  provided  that  total
                           Restricted Stock Awards granted to Outside  Directors
                           shall not exceed the limitations set forth at Section
                           6.4(b) herein.

6.2 Award Payouts.  Awards may be paid out in the form of cash, Common Stock, or
combinations   thereof  as  the  Committee  shall   determine,   and  with  such
restrictions as it may impose.

6.3  Consideration  for Stock  Options.  The Exercise Price for any Stock Option
granted  under  this Plan may be paid by means of any  lawful  consideration  as
determined by the Committee, including, without limitation, one or a combination
of the following methods:

                  (a)      cash,  check  payable  to the  order of the  Company,
                           or electronic funds transfer;

                  (b)      the  delivery of  previously  owned  shares of Common
                           Stock; or

                                       C-9




                  (c)      subject  to  such  procedures  as the  Committee  may
                           adopt, pursuant to a "cashless exercise" with a third
                           party who provides  financing for the purposes of (or
                           who otherwise  facilitates)  the purchase or exercise
                           of such Stock Option.

In no event shall any shares newly-issued by the Company be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the Committee
allows a Participant to exercise an Option by delivering  shares of Common Stock
previously  owned by such  Participant,  any such  shares  delivered  which were
initially acquired by the Participant from the Company (upon exercise of a stock
option or otherwise)  must have been owned by the  Participant  for at least six
months  prior to such date of  delivery.  Shares of Common Stock used to satisfy
the  Exercise  Price of an Option  shall be valued at their Fair Market Value on
the date of  exercise.  The Company  will not be obligated to deliver any shares
unless and until it receives full payment of the Exercise  Price and any related
withholding  obligations  under  Section 9.5 have been  satisfied,  or until any
other  conditions  applicable  to exercise or purchase have been  satisfied.  No
Shares of Common Stock shall be issued  until full payment has been  received by
the Company, and no Participant shall have any of the rights of a stockholder of
the Company  until  shares of Common  Stock are issued upon the exercise of such
Stock Options.  Unless  expressly  provided  otherwise in the  applicable  Award
Agreement, the Committee may at any time within its sole discretion eliminate or
limit a Participant's ability to pay the purchase or Exercise Price of any Award
by any method other than a cash payment to the Company.

6.4      Limitations on Awards.

         (a)      Stock  Option  Award  Limitations.  In no event  shall  Shares
                  subject  to  Options  granted  to  Outside  Directors  in  the
                  aggregate  under this Plan  exceed  more than 30% of the total
                  number of shares  authorized for delivery under this Plan with
                  respect to Stock Options or exceed more than 5% of such shares
                  to any individual  Outside Director pursuant to Section 5.2(a)
                  herein. In no event shall Shares subject to Options granted to
                  any single  Employee  exceed more than 25% of the total number
                  of shares  authorized  for delivery under the Plan pursuant to
                  Section 5.2(a) herein.

         (b)      Restricted Stock Award  Limitations.  In no event shall shares
                  subject  to  Restricted   Stock  Awards   granted  to  Outside
                  Directors  in the  aggregate  under this Plan exceed more than
                  30% of the  total  number of shares  authorized  for  delivery
                  under this Plan with  respect to  Restricted  Stock  Awards or
                  exceed  more  than  5%  to  any  individual  Outside  Director
                  pursuant to Section  5.2(b)  herein.  In no event shall shares
                  subject  to  Restricted  Stock  Awards  granted  to any single
                  Employee  exceed  more than 25% of the total  number of shares
                  authorized  for  delivery  under the Plan  pursuant to Section
                  5.2(b) herein.

         (c)      Vesting of Awards.  Except as otherwise  provided by the terms
                  of the Plan or by action of the  Committee  at the time of the
                  grant of an Award, Stock Options will be first exercisable and
                  Restricted Stock Awards will be earned and  non-forfeitable at
                  the rate of 20% of such Award on the one year  anniversary  of
                  the date of grant  and 20%  annually  thereafter  during  such
                  periods  of  service  as an  Employee,  Director  or  Director
                  Emeritus.

7.       EFFECT OF TERMINATION OF SERVICE ON AWARDS.

7.1 General.  The  Committee  shall  establish  the effect of a  termination  of
employment or service on the continuation of rights and benefits available under
an Award,  and, in so doing, may make  distinctions  based

                                      C-10



upon,  INTER ALIA, the recipient of such Award, the cause of termination and the
type of the Award.  Notwithstanding the foregoing,  the terms of Awards shall be
consistent with the following, as applicable:

     (a)  Termination  of  Employment.  In  the  event  that  any  Participant's
          employment with the Company shall terminate for any reason, other than
          Disability or death,  all of any such  Participant's  Incentive  Stock
          Options,  and all of any such  Participant's  rights  to  purchase  or
          receive shares of Common Stock pursuant thereto,  shall  automatically
          terminate  on (A) the  earlier  of (i) or  (ii):  (i)  the  respective
          expiration  dates of any such  Incentive  Stock  Options,  or (ii) the
          expiration  of not more than three (3)  months  after the date of such
          termination of employment;  or (B) at such later date as is determined
          by the Committee at the time of the grant of such Award based upon the
          Participant's  continuing status as a Director or Director Emeritus of
          the Bank or the  Company,  but only if,  and to the extent  that,  the
          Participant  was entitled to exercise any such Incentive Stock Options
          at the date of such  termination of employment,  and further that such
          Award shall thereafter be deemed a Non-Statutory Stock Option.

     (b)  Disability.  In the event that any  Participant's  employment with the
          Company  shall  terminate  as the  result  of the  Disability  of such
          Participant, such Participant may exercise any Incentive Stock Options
          granted to the  Participant  pursuant to the Plan at any time prior to
          the  earlier  of (i)  the  respective  expiration  dates  of any  such
          Incentive  Stock  Options or (ii) the date which is one (1) year after
          the date of such  termination of  employment,  but only if, and to the
          extent  that,  the  Participant  was  entitled  to  exercise  any such
          Incentive Stock Options at the date of such termination of employment.

     (c)  Death. In the event of the death of a Participant, any Incentive Stock
          Options   granted  to  such   Participant  may  be  exercised  by  the
          Participant's  Beneficiary  or the  person  or  persons  to  whom  the
          Participant's  rights under any such  Incentive  Stock Options pass by
          will  or by the  laws  of  descent  and  distribution  (including  the
          Participant's  estate during the period of administration) at any time
          prior to the  earlier of (i) the  respective  expiration  dates of any
          such  Incentive  Stock Options or (ii) the date which is two (2) years
          after the date of death of such  Participant,  but only if, and to the
          extent  that,  the  Participant  was  entitled  to  exercise  any such
          Incentive  Stock  Options at the date of death.  For  purposes of this
          Section  7.1(c),  any  Incentive  Stock Option held by an  Participant
          shall be considered  exercisable  at the date of his death if the only
          unsatisfied   condition   precedent  to  the  exercisability  of  such
          Incentive  Stock  Option  at the  date of death  is the  passage  of a
          specified  period of time. At the  discretion of the  Committee,  upon
          exercise of such Options,  the  Beneficiary may receive Shares or cash
          or a combination  thereof.  If cash shall be paid in lieu of shares of
          Common Stock,  such cash shall be equal to the difference  between the
          Fair  Market  Value  of such  Shares  and the  exercise  price of such
          Options on the exercise date.

7.2 Events Not Deemed  Terminations  of  Employment or Service.  Unless  Company
policy or the Committee provides  otherwise,  the employment  relationship shall
not be considered  terminated in the case of (a) sick leave, (b) military leave,
or (c) any other leave of absence  authorized  by the Company or the  Committee;
provided  that,  unless  reemployment  upon  the  expiration  of such  leave  is
guaranteed  by contract  or law,  such leave is for a period of not more than 90
days.  In the case of any  Employee on an approved  leave of absence,  continued
vesting of the Award while on leave may be suspended until the Employee  returns
to service,  unless the Committee otherwise provides or applicable law otherwise
requires.  In no event shall an Award be exercised  after the  expiration of the
term set forth in the Award Agreement.

                                      C-11



7.3 Effect of Change of  Affiliate  Status.  For  purposes  of this Plan and any
Award,  if an entity ceases to be an Affiliate of the Company,  a termination of
employment  or service  shall be deemed to have  occurred  with  respect to each
individual who does not continue as an Employee or Outside Director with another
entity  within the Company  after  giving  effect to the  Affiliate's  change in
status.

8. ADJUSTMENTS; ACCELERATION UPON A CHANGE IN CONTROL.

8.1  Adjustments.  Upon  any  reclassification,  recapitalization,  stock  split
(including a stock split in the form of a stock dividend) or reverse stock split
("stock   split");   any   merger,   combination,    consolidation,   or   other
reorganization;  any  spin-off,  split-up,  or  similar  extraordinary  dividend
distribution with respect to the Common Stock (whether in the form of securities
or property);  any exchange of Common Stock or other  securities of the Company,
or any similar,  unusual or extraordinary  corporate  transaction  affecting the
Common Stock;  or a sale of all or  substantially  all the business or assets of
the Company in its entirety;  then the Committee shall, in such manner,  to such
extent (if any) and at such times as it deems  appropriate  and equitable  under
the circumstances:

     (a)  proportionately  adjust  any or all of:  (1) the  number  and  type of
          shares of Common Stock (or other  securities)  that  thereafter may be
          made the  subject of Awards  (including  the  specific  Share  Limits,
          maximums and numbers of shares set forth elsewhere in this Plan);  (2)
          the  number,  amount  and type of  shares  of  Common  Stock (or other
          securities or property) subject to any or all outstanding  Awards; (3)
          the  grant,  purchase,  or  Exercise  Price of any or all  outstanding
          Awards;  (4) the securities,  cash or other property  deliverable upon
          exercise or payment of any outstanding  Awards; or (5) the performance
          standards applicable to any outstanding Awards; or

     (b)  make provision for a cash payment or for the assumption,  substitution
          or  exchange  of  any  or  all  outstanding  Awards,  based  upon  the
          distribution or consideration payable to holders of the Common Stock.

8.2 The Committee may adopt such valuation  methodologies for outstanding Awards
as it deems reasonable in the event of a cash or property settlement and, in the
case of Options, may base such settlement solely upon the excess, if any, of the
per share  amount  payable  upon or in respect  of such event over the  Exercise
Price or base price of the  Award.  With  respect  to any Award of an  Incentive
Stock Option,  the  Committee  may make an adjustment  that causes the Option to
cease to  qualify  as an  Incentive  Stock  Option  without  the  consent of the
affected Participant.

8.3 Upon any of the events set forth in Section 8.1, the Committee may take such
action  prior to such event to the extent  that the  Committee  deems the action
necessary  to permit the  Participant  to realize  the  benefits  intended to be
conveyed  with  respect  to the  Awards  in the  same  manner  as is or  will be
available to  stockholders  of the Company  generally.  In the case of any stock
split or  reverse  stock  split,  if no  action is taken by the  Committee,  the
proportionate   adjustments   contemplated   by  Section   8.1(a)   above  shall
nevertheless be made.

8.4  Automatic  Acceleration  of  Awards.  Unless  otherwise  determined  by the
Committee,  upon the death or Disability of an Award  recipient or upon a Change
in Control of the Company or the Bank, each Stock Option then outstanding  shall
become fully vested and  exercisable  and remain  exercisable  for its remaining
term and all Restricted Stock Awards then outstanding  shall be fully vested, be
deemed earned and non- forfeitable and be free of restrictions.

                                      C-12



8.5 Acceleration of Vesting.  The Committee shall at all times have the power to
accelerate  the  exercise  date of Options  and the date that  Restricted  Stock
Awards shall be earned and  non-forfeitable  with respect to previously  granted
Awards;  provided that such action is not contrary to  regulations of the Office
of Thrift  Supervision or other  appropriate  banking  regulatory agency then in
effect.

9. MISCELLANEOUS PROVISIONS.

9.1  Compliance  with Laws.  This Plan, the granting and vesting of Awards under
this Plan,  the offer,  issuance  and  delivery of shares of Common  Stock,  the
acceptance  of payment of money  under this Plan or under  Awards are subject to
compliance  with all applicable  federal and state laws,  rules and  regulations
(including,  but not limited to, state and federal  securities laws) and to such
approvals by any listing,  regulatory or  governmental  authority as may, in the
opinion of counsel for the Company,  be  necessary  or  advisable in  connection
therewith.  The  person  acquiring  any  securities  under  this Plan  will,  if
requested by the Company,  provide such  assurances and  representations  to the
Company as may be deemed  necessary or desirable to assure  compliance  with all
applicable legal and accounting requirements.

9.2 Claims.  No person shall have any claim or rights to an Award (or additional
Awards, as the case may be) under this Plan, subject to any express  contractual
rights to the contrary (set forth in a document other than this Plan).

9.3 No  Employment/Service  Contract.  Nothing contained in this Plan (or in any
other documents under this Plan or in any Award Agreement) shall confer upon any
Participant any right to continue in the employ or other service of the Company,
constitute any contract or agreement of employment or other service or affect an
Employee's  status as an  employee-at-will,  nor  interfere  in any way with the
right of the Company to change a  Participant's  compensation or other benefits,
or terminate his or her  employment  or other  service,  with or without  cause.
Nothing in this  Section  9.3,  however,  is  intended to  adversely  affect any
express  independent  right of such Participant  under a separate  employment or
service contract other than an Award Agreement.

9.4 Plan Not Funded.  Awards  payable under this Plan shall be payable in shares
of Common  Stock or from the  general  assets of the  Company.  No  Participant,
beneficiary or other person shall have any right,  title or interest in any fund
or in any specific asset (including shares of Common Stock,  except as expressly
provided otherwise) of the Company by reason of any Award hereunder. Neither the
provisions  of this Plan (or of any  related  documents),  nor the  creation  or
adoption of this Plan,  nor any action taken  pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship  between  the  Company and any  Participant,  Beneficiary  or other
person.  Notwithstanding  the  foregoing,  the Company may  establish a Trust in
accordance  with  Section 10 with  respect  to Awards  made in  accordance  with
Section  6.1(b) herein.  To the extent that a Participant,  Beneficiary or other
person acquires a right to receive payment pursuant to any Award hereunder, such
right shall be no greater than the right of any  unsecured  general  creditor of
the Company.

9.5 Tax Withholding.  Upon any exercise,  vesting,  or payment of any Award, the
Company shall have the right, within its sole discretion, to:

     (a)  require the Participant (or the Participant's personal  representative
          or  Beneficiary,  as the case may be) to pay or provide for payment of
          at least the  minimum  amount of any taxes  which the  Company  may be
          required to withhold with respect to such Award or payment; or

                                      C-13



     (b)  deduct from any amount  otherwise  payable in cash to the  Participant
          (or the Participant's personal  representative or Beneficiary,  as the
          case may be) the minimum  amount of any taxes which the Company may be
          required to withhold with respect to such cash payment, or

     (    c) in any case where tax  withholding  is required in connection  with
          the delivery of shares of Common Stock under this Plan,  the Committee
          may,  in its sole  discretion,  pursuant  to such rules and subject to
          such  conditions as the Committee may establish,  reduce the number of
          shares to be delivered to the Participant by the appropriate number of
          shares,  valued in a  consistent  manner at their Fair Market Value as
          necessary to satisfy the minimum applicable withholding obligation. In
          no event shall the shares  withheld exceed the minimum whole number of
          shares required for tax withholding under applicable law.

9.6 Effective Date, Termination and Suspension, Amendments.

     (a)  This Plan is  effective  upon the later of approval of the Plan by the
          Board of  Directors  of the  Company  or the vote of  approval  by the
          stockholders  of  the  Company  ("Approval   Date").   Unless  earlier
          terminated  by the Board,  this Plan shall  terminate  at the close of
          business on the day before the tenth anniversary of the Approval Date.
          After the termination of this Plan either upon such stated  expiration
          date or its earlier termination by the Board, no additional Awards may
          be granted under this Plan,  but  previously  granted  Awards (and the
          authority  of  the  Committee  with  respect  thereto,  including  the
          authority to amend such Awards) shall remain outstanding in accordance
          with  their   applicable  terms  and  conditions  and  the  terms  and
          conditions of this Plan.

     (b)  Board Authorization.  Subject to applicable laws and regulations,  the
          Board of Directors may, at any time,  terminate or, from time to time,
          amend,  modify or suspend  this Plan,  in whole or in part;  provided,
          however,  that no such  amendment may have the effect of repricing the
          Exercise Price of Options.  No Awards may be granted during any period
          that the Board of Directors suspends this Plan.

     (c)  Stockholder  Approval.  Stockholder  approval  of such  Plan  shall be
          determined  by an  affirmative  vote of a majority  of the votes cast,
          excluding  shares of Common  Stock  owned by the MHC,  at a meeting of
          stockholders  of the  Company,  and a vote of a majority  of the votes
          eligible to be cast, including shares of the Common Stock owned by the
          MHC, at such meeting of  stockholders,  or such other approval vote as
          may be  required  by the Office of Thrift  Supervision.  Any  material
          amendment  to the  Plan  deemed  to  require  a  ratification  vote of
          stockholders shall be ratified by an affirmative vote of a majority of
          the votes cast at a meeting  of  stockholders  of the  Company or such
          other  approval  vote  as may be  required  by the  Office  of  Thrift
          Supervision.

     (d)  Limitations on Amendments to Plan and Awards. No amendment, suspension
          or termination of this Plan or change affecting any outstanding  Award
          shall,  without the written consent of the Participant,  affect in any
          manner materially adverse to the Participant any rights or benefits of
          the  Participant or obligations of the Company under any Award granted
          under this Plan prior to the effective  date of such change.  Changes,
          settlements  and other actions  contemplated by Section 8 shall not be
          deemed to  constitute  changes  or  amendments  for  purposes  of this
          Section 9.6.

                                      C-14



9.7 Governing Law; Compliance with Regulations; Construction; Severability.

     (a)  This Plan, the Awards,  all documents  evidencing Awards and all other
          related  documents  shall be governed by, and  construed in accordance
          with,  the laws of the United  States and the laws of the State of New
          Jersey to the extent not preempted by Federal law.

     (b)  This Plan will  comply  with the  requirements  set forth in 12 C.F.R.
          Sec.  575.8 and 12 C.F.R.  Sec.  563b.500.  Notwithstanding  any other
          provision in this Plan, no shares of Common Stock shall be issued with
          respect to any Award to the extent that such issuance  would cause the
          MHC to fail to qualify as a mutual  holding  company of the Bank under
          applicable federal laws or regulations.

     (c)  Severability. If a court of competent jurisdiction holds any provision
          invalid and unenforceable, the remaining provisions of this Plan shall
          continue in effect.

     (d)  Plan  Construction;  Rule 16b-3.  It is the intent of the Company that
          the Awards and  transactions  permitted by Awards be  interpreted in a
          manner that, in the case of Participants  who are or may be subject to
          Section  16 of  the  Exchange  Act,  qualify,  to the  maximum  extent
          compatible  with the express terms of the Award,  for  exemption  from
          matching  liability  under Rule 16b-3  promulgated  under the Exchange
          Act.   Notwithstanding  the  foregoing,  the  Company  shall  have  no
          liability to any  Participant for Section 16 consequences of Awards or
          events affecting Awards if an Award or event does not so qualify.

     (e)  Shares of Common  Stock shall not be issued with  respect to any Award
          granted under the Plan unless the issuance and delivery of such shares
          shall  comply  with  all  relevant   provisions  of  applicable   law,
          including, without limitation, the Securities Act of 1933, as amended,
          the rules and regulations promulgated thereunder, any applicable state
          securities laws and the  requirements of any stock exchange upon which
          the shares may then be listed.

     (f)  The inability of the Company to obtain any  necessary  authorizations,
          approvals  or letters of  non-objection  from any  regulatory  body or
          authority  deemed by the  Company's  counsel  to be  necessary  to the
          lawful  issuance  and sale of any  shares  of  Common  Stock  issuable
          hereunder  shall relieve the Company of any liability  with respect to
          the non-issuance or sale of such shares.

     (g)  As a condition to the exercise of any Option or the delivery of shares
          in  accordance  with an Award,  the  Company  may  require  the person
          exercising the Option or receiving delivery of the shares to make such
          representations  and  warranties  as may be  necessary  to assure  the
          availability  of an exemption from the  registration  requirements  of
          federal or state securities law.

     (h)  Notwithstanding  anything herein to the contrary, upon the termination
          of  employment  or  service  of a  Participant  by the  Company  or an
          Affiliate  for  "cause"  as  defined  at  12  C.F.R.  563.39(b)(1)  as
          determined by the Board of Directors or the Committee, all Awards held
          by such  Participant  which  have  not yet  been  delivered  shall  be
          forfeited by such  Participant  as of the date of such  termination of
          employment or service.

                                      C-15



     (i)  Upon  the  exercise  of an  Option,  the  Committee,  in its  sole and
          absolute  discretion,  may make a cash payment to the Participant,  in
          whole or in part,  in lieu of the delivery of shares of Common  Stock.
          Such cash payment to be paid in lieu of delivery of Common Stock shall
          be equal to the difference between the Fair Market Value of the Common
          Stock on the date of the Option  exercise and the  exercise  price per
          share of the Option.  Such cash  payment  shall be in exchange for the
          cancellation  of such Option.  Such cash payment  shall not be made in
          the event  that such  transaction  would  result in  liability  to the
          Participant or the Company under Section 16(b) of the Exchange Act and
          regulations  promulgated  thereunder,  or subject the  Participant  to
          additional tax liabilities  related to such cash payments  pursuant to
          Section 409A of the Code.

     (j)  In the event that the Bank shall be deemed critically undercapitalized
          (as defined at 12 C.F.R.  Section  565.4),  is subject to  enforcement
          action by the  Office of Thrift  Supervision,  or  receives  a capital
          directive under 12 C.F.R.  Section 565.7,  then all Options awarded to
          executive  officers or Directors of the Company or its Affiliates must
          exercise such Options or forfeit such Options.

9.8 Captions. Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate  reference.  Such headings shall
not  be  deemed  in  any  way  material  or  relevant  to  the  construction  or
interpretation of this Plan or any provision thereof.

9.9  Non-Exclusivity  of Plan.  Nothing in this Plan shall limit or be deemed to
limit the  authority of the Board of Directors or the  Committee to grant Awards
or authorize  any other  compensation,  with or without  reference to the Common
Stock, under any other plan or authority.

9.10  Limitation  on  Liability.  No  Director,  member of the  Committee or the
Trustee shall be liable for any determination made in good faith with respect to
the  Plan,  the  Trust or any  Awards  granted.  If a  Director,  member  of the
Committee or the Trustee is a party or is  threatened  to be made a party to any
threatened,  pending or completed  action,  suit or  proceeding,  whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such  capacity  under or with  respect to the Plan,  the  Company
shall  indemnify  such person  against  expenses  (including  attorney's  fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in  connection  with such action,  suit or proceeding if he or she
acted in good faith and in a manner he or she  reasonably  believed to be in the
best  interests  of the  Company and its  Affiliates  and,  with  respect to any
criminal  action or  proceeding,  had no reasonable  cause to believe his or her
conduct was unlawful.

                                      C-16



10.  TRUST.

10.1  Activities of Trustee.  The Trustee(s)  shall receive,  hold,  administer,
invest and make  distributions  and  disbursements  from the Trust in accordance
with  the  provisions  of  the  Plan  and  the  applicable  directions,   rules,
regulations,  procedures and policies  established by the Committee  pursuant to
the Plan.

10.2  Management  of Trust.  It is the  intention  of this Plan that the Trustee
shall have complete  authority and  discretion  with respect to the  management,
control  and  investment  of the Trust,  and that the Trustee  shall  invest all
assets of the Trust,  except  those  attributable  to cash  dividends  paid with
respect to unearned and unawarded  Restricted  Stock Awards,  in Common Stock to
the fullest extent practicable, except to the extent that the Trustee determines
that the holding of monies in cash or cash  equivalents is necessary to meet the
obligations of the Trust.  In performing  their duties,  the Trustees shall have
the  power to do all  things  and  execute  such  instruments  as may be  deemed
necessary or proper, including the following powers:

     (a)  To invest up to one hundred  percent (100%) of all Trust assets in the
          Common  Stock  without  regard  to any law now or  hereafter  in force
          limiting investments for Trustees or other fiduciaries. The investment
          authorized herein may constitute the only investment of the Trust, and
          in making  such  investment,  the  Trustee is  authorized  to purchase
          Common Stock from the Parent or from any other source, and such Common
          Stock so  purchased  may be  outstanding,  newly  issued,  or treasury
          shares.

     (b)  To invest any Trust assets not otherwise  invested in accordance  with
          (a)  above in such  deposit  accounts,  and  certificates  of  deposit
          (including those issued by the Bank), obligations of the United States
          government  or its  agencies  or such  other  investments  as shall be
          considered the equivalent of cash.

     (c)  To sell,  exchange or  otherwise  dispose of any  property at any time
          held or acquired by the Trust.

     (d)  To cause  stocks,  bonds or other  securities  to be registered in the
          name of a nominee,  without the addition of words indicating that such
          security  is an asset of the  Trust  (but  accurate  records  shall be
          maintained showing that such security is an asset of the Trust).

     (e)  To hold cash without interest in such amounts as may be in the opinion
          of the Trustee  reasonable  for the proper  operation  of the Plan and
          Trust.

     (f)  To employ brokers, agents, custodians, consultants and accountants.

     (g)  To hire counsel to render advice with respect to their rights,  duties
          and   obligations   hereunder,   and  such  other  legal  services  or
          representation as they may deem desirable.

     (h)  To  hold  funds  and  securities   representing   the  amounts  to  be
          distributed to a Participant or his  Beneficiary as a consequence of a
          dispute as to the disposition thereof, whether in a segregated account
          or held in common with other assets.

                                      C-17



     (i)  As may be  directed by the  Committee  or the Board from time to time,
          the  Trustee  shall  pay to the  Company  any  earnings  of the  Trust
          attributable to unawarded or forfeited Restricted Stock Awards.

         Notwithstanding  anything herein contained to the contrary, the Trustee
shall not be required to make any  inventory,  appraisal or settlement or report
to any court,  or to secure any order of a court for the  exercise  of any power
herein contained, or to maintain bond.

10.3 Records and  Accounts.  The Trustee  shall  maintain  accurate and detailed
records and accounts of all transactions of the Trust,  which shall be available
at all reasonable  times for inspection by any legally entitled person or entity
to the extent required by applicable law, or any other person  determined by the
Committee.

10.4 Earnings. All earnings, gains and losses with respect to Trust assets shall
be allocated in accordance with a reasonable procedure adopted by the Committee,
to bookkeeping accounts for Participants or to the general account of the Trust,
depending on the nature and allocation of the assets  generating  such earnings,
gains and losses.  In particular,  any earnings on cash dividends  received with
respect  to  Restricted   Stock  Awards  shall  be  allocated  to  accounts  for
Participants,  except to the extent that such cash dividends are  distributed to
Participants,  if such shares are the subject of  outstanding  Restricted  Stock
Awards, or, otherwise held by the Trust or returned to the Company.

10.5   Expenses.   All  costs  and  expenses   incurred  in  the  operation  and
administration of this Plan,  including those incurred by the Trustee,  shall be
paid by the  Company  or, if not so paid,  then paid from the cash assets of the
Trust.

10.6 Indemnification.  Subject to the requirements and limitations of applicable
laws and regulations,  the Company shall indemnify,  defend and hold the Trustee
harmless against all claims,  expenses and liabilities arising out of or related
to the  exercise  of the  Trustee's  powers and the  discharge  of their  duties
hereunder,  unless the same shall be due to their  gross  negligence  or willful
misconduct.

10.7 Term of Trust. The Trust, if established,  shall remain in effect until the
earlier of (i) termination by the Committee, (ii) the distribution of all assets
of the Trust,  or (iii) 21 years from the  Effective  Date.  Termination  of the
Trust shall not effect any Restricted Stock Award previously  granted,  and such
Restricted  Stock Award shall  remain  valid and in effect  until they have been
earned and paid, or by their terms expire or are forfeited.

10.8 Tax Status of Trust. It is intended that the Trust established hereby shall
be treated as a grantor trust of the Company under the provisions of Section 671
et seq. of the Code.

                                      C-18



--------------------------------------------------------------------------------
                             KEARNY FINANCIAL CORP.
                               120 PASSAIC AVENUE
                           FAIRFIELD, NEW JERSEY 07004
--------------------------------------------------------------------------------

                         ANNUAL MEETING OF STOCKHOLDERS
                                OCTOBER 24, 2005

         The  undersigned  hereby  appoints  the  Board of  Directors  of Kearny
Financial  Corp.  (the  "Company"),   or  its  designee,  with  full  powers  of
substitution,  to act as attorneys and proxies for the undersigned,  to vote all
shares of common stock of the Company, which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at the offices
of Kearny Financial Corp., 120 Passaic Avenue,  Fairfield, New Jersey on October
24, 2005, at 10:00 a.m and at any and all adjournments thereof, in the following
manner:

                                                      FOR    WITHHELD
1.        The election as directors of the nominees
          listed with a term to expire
          as indicated
          (except as marked to the contrary below):   |_|       |_|

          Leopold W. Montanaro (2006)
          Theodore J. Aanensen (2008)
          Joseph P. Mazza (2008)
          John F. Regan (2008)

INSTRUCTIONS: To withhold your vote for any nominee, write the nominee's name on
the line provided below.

________________________________________________________________________________

                                                      FOR    AGAINST    ABSTAIN
2.        Approval of the
          Kearny Financial Corp.
          2005 Stock Compensation
          and Incentive Plan                          |_|     |_|         |_|

3.        Ratification of the appointment of 
          Beard Miller  Company LLP as the
          Company's independent auditor for the
          fiscal year ending June 30, 2006            |_|     |_|         |_|


          The Board of  Directors  recommends  a vote  "FOR"  the  above  listed
nominees and proposals.

THIS  SIGNED  PROXY  WILL BE  VOTED  AS  DIRECTED,  BUT IF NO  INSTRUCTIONS  ARE
SPECIFIED,  THIS  SIGNED  PROXY  WILL BE VOTED FOR THE  NOMINEES  LISTED AND THE
PROPOSALS  STATED.  IF ANY OTHER  BUSINESS IS  PRESENTED AT SUCH  MEETING,  THIS
SIGNED PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST  JUDGMENT.
AT THE PRESENT  TIME,  THE BOARD OF DIRECTORS  KNOWS OF NO OTHER  BUSINESS TO BE
PRESENTED AT THE MEETING.



                THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

         Should the undersigned be present and elect to vote at the Meeting,  or
at any  adjournments  thereof,  and after  notification  to the Secretary of the
Company at the Meeting of the  stockholder's  decision to terminate  this Proxy,
the power of said  attorneys  and proxies shall be deemed  terminated  and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently  dated Proxy or by written  notification  to the  Secretary  of the
Company of his or her decision to terminate this Proxy.

         The  undersigned  acknowledges  receipt  from the Company  prior to the
execution of this proxy of a Notice of Annual Meeting of  Stockholders,  a Proxy
Statement, and the 2005 Annual Report to Stockholders.


                                              o    Check Box if You Plan
Dated: ____________________________                to Attend the Annual Meeting.



___________________________________           __________________________________
PRINT NAME OF STOCKHOLDER                     PRINT NAME OF STOCKHOLDER


___________________________________           __________________________________
SIGNATURE OF STOCKHOLDER                      SIGNATURE OF STOCKHOLDER



Please  sign  exactly  as your name  appears  on this  Proxy.  When  signing  as
attorney, executor,  administrator,  trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.



PLEASE  COMPLETE,  DATE,  SIGN,  AND MAIL THIS PROXY  PROMPTLY  IN THE  ENCLOSED
POSTAGE-PREPAID ENVELOPE.